Similien Corporation Produces and Sells a Single Product

Multiple Choice

Similien Corporation produces and sells a single product. Data concerning that product appear below:
Fixed expenses are $300,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $17,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,400 units. What should be the overall effect on the company's monthly net operating income of this change?

A) increase of $64,200
B) increase of $215,400
C) decrease of $64,200
D) decrease of $5,800