Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses by $10,000 and found that sales increased by $30,000. Was it a good decision to increase advertising expenses? Suppose that the contribution margin ratio is now 0.4. Would it be a good decision to increase advertising expenses?
Answer to relevant QuestionsMultiple Choice Questions 1. If the variable cost per unit goes down, Contribution margin Break-even point a. Increases, increases. b. Increases, decreases. c. Decreases, decreases. d. Decreases, increases. e. Decreases ...Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed ...Suppose that Adams Company sells a product for $20. Unit costs are as follows: Direct materials ................. $3.90 Direct labor .................. 1.40 Variable factory overhead ............ 2.10 Variable selling and ...Refer to the information for Peace River Products above. Peace River Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Peace River ...Tensing Company’s projected profit for the coming year is as follows: Required: 1. Compute the break-even point in units. 2. How many units must be sold to earn a profit of $450,000? 3. Compute the contribution margin ...
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