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25 August, 17:42

Data concerning Bunck Corporation's single product appear below: Per Unit Percent of SalesSelling price $170 100% Variable expenses 34 20% Contribution margin $136 80% Fixed expenses are $202000 per month. the company is currently selling 2000 units per month. management is considering using a new component that would increase the unit variable cost by $18. since the new component would increase the features of the companys product the marking manager prdicts that month sales increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change? (A) decrease of $47,200 (B) decrease of $11,200 (C) increase of $47,200 (D) increase of $11,200

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  1. 25 August, 20:26
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    The correct answer is C.

    Explanation:

    Giving the following information:

    Selling price $170

    Variable expenses 34

    Contribution margin $136

    Fixed expenses are $202,000 per month.

    The company is currently selling 2000 units per month.

    New variable costs = 34+18 = 52

    New units sale = 2400

    Increase in income = (136-18) * 400 = $47,200
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