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6. Jilk Inc.'s contribution margin ratio is 58% and its fixed monthly expenses are $36,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $103,000?

  • A.

    $23,740

  • b.

    $59,740

  • c.

    $67,000

  • d.

    $7,260

7. Data concerning Kardas Corporation's single product appear below:

The company is currently selling 8,000 units per month. Fixed expenses are $719,000 per month. The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

  • a.

    decrease of $160

  • b.

    increase of $20,160

  • c.

    decrease of $20,000

  • D.

    increase of $160

Increase in net operating income: $177,160 - $177,000 = $160

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