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Effect on the company's monthly net operating income

Can you please help with these two questions?

2. At a volume of 20,000 direct labor hours, Tirso Company incurs $50,000 in factory overhead costs, including $10,000 in fixed costs. Assuming that this activity is within the relevant range, if volume increases to 25,000 direct labor hours, Tirso Company would expect to incur total factory overhead costs of:

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3. Cobble Corporation produces and sells a single product. Data concerning that product appear below:

Per Unit Percent of Sales
Selling price $160 100%
Variable expenses 48 30%
Contribution margin $112 70%

Fixed expenses are $499,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change?

A) increase of $56,100
B) decrease of $8,900
C) increase of $99,300
D) decrease of $56,100

Solution Preview

2. At a volume of 20,000 direct labor hours, Tirso Company incurs $50,000 in factory overhead costs, including $10,000 in fixed costs. Assuming that this activity is within the relevant range, if volume increases to 25,000 direct labor hours, Tirso Company would expect to incur total factory overhead costs of:
It would be Fixed costs +Variable ...

Solution Summary

Response provides steps to compute the effect on the company's monthly net operating income

$2.19