The president believes that a $6,200 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $84,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

Solution and Explanation:

calculating the increase in the net operating income is as follows:

S.no                    Particulars and explanation                    Amount

1.                    Sales ( $268000 + 84000 )                         352000

2. Contribution ( 1 multiply with 40 percent)                      140000

3. Fied expense ( $119200 plus $6200 )                         125400

4. Net operating income ( 2 step minus 3 step)                $14600

therefore, net operating income increased by $ 14600 plus $12000

Note: the sales were not given, so i have taken or assumed. Please change the figure if there is different figure of sales in the question given.

its simple as this, microeconomics is the study of economics at an individual, group or company level, macroeconomics on the other hand, is the study of a national economy as a whole.

hope it =^-^=

answer; encouraging the development of innovations by firms attempting to break a monopoly; (creative destruction)