The sales manager feels that a $6,400 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $86,000 increase in monthly sales. if the sales manager is right, what will be the effect on the company's monthly net operating income or loss? (use the incremental approach in preparing your answer.)

Question

Mackenzie Vaughan

Business

2 September, 07:28

The sales manager feels that a $6,400 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $86,000 increase in monthly sales. if the sales manager is right, what will be the effect on the company's monthly net operating income or loss? (use the incremental approach in preparing your answer.)

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Ayana Ochoa · Answer 1

Incrementally, the sales manage has spent an extra $6,400, so the net operating income or loss has decreased by $6,400. The increase in $86,000 will increase the net operating income or loss by $86,000. The net change in net operating income or loss will be (86,000 - 6,400) = (79,600) = + $79,600