How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,500 and monthly sales increase by $17,500? (Round any unit calculations up to the nearest whole unit.)

A. $1,675

B. No

Explanation:

a. Calculation for increase or decrease in net operating income

Increase in monthly sales$17,500

× Contribution margin ratio39%

Increase in Contribution margin$6,825

(17,500×39%)

Less: Advertising costs$8,500

Net Operating income decreases by$1,675

($6,825-$8,500)

b. Based on the above Calculation the advertising should NOT be increased.

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