Wilson Company prepared the following preliminary budget assuming no advertising expenditures

Wilson Company prepared the following preliminary budget assuming no advertising expenditures:

Selling price $10 per unit

Unit sales 100,000

Variable expenses $600,000

Fixed expenses $300,000

Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net operating income?

A) $175,000

B) $190,000

C) $205,000

D) $365,000                                                                                                               SOLUTION