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  3. total sales (2,000 units) $500,000 ...

Total Sales (2,000 units) $500,000 ...

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Verified Solution

Question

Accounting

Total

Sales (2,000 units)

$500,000

Less Variable Costs

$300,000

Contribution Margin

$200,000

Less Fixed Costs

$150,000

Net Operating Income

$ 50,000

The information above represents the contribution format income statement of Global Agriculture Suppliers Inc. for agriculture equipment supplied to the Guyana market. The marketing manager of the company argues that if they increase their advertising budget by $5,000 and reduce the selling price by 10% the company would be able to attract government contracts to supply to local farmers. Ultimately, a 15% increase in sales would occur.

Which one of the following would be the net operating income if the changes were made?

Select one:

A. $17,500

B. $37,500

C. $22,500

D. $50,000

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