Shelhorse Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit Percent of Sales
Selling price $260 100%
Variable expenses 91 35%
Contribution margin $169 65%
Fixed expenses are $366,000 per month. The company is currently selling 6,100 units per month.
The marketing manager believes that a $23,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales.
What should be the overall effect on the company's monthly net operating income of this change?
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