Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses by $10,000 and

Question:

Suppose a firm with a 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 ratio is now 0.4. Would it be a good decision to increase advertising expenses?
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...