The McPherson Company is facing an increase in the variable cost of producing and selling one of its products for the upcoming year. As a result, the sales manager has made a proposal to increase the selling price of the product while increasing the advertising budget at the same time. McPherson has provided the following information regarding the current year results and the proposal made by the sales manager:
Relative to the current year, the sales manager's proposal will:
A) decrease operating income by $90,000.
B) increase contribution margin by $90,000.
C) decrease the unit breakeven point.
D) decrease operating income by $110,000.
Correct Answer:
Verified
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