Information for Drone On Limited is shown below:

Per Unit Percentage of Sales

Selling price $1,200 100%

Variable expenses 900 75%

Contribution margin $300 25%

Total fixed expenses are $35,000 per month, and the company is selling 1,600 drones per month.

Required:

1.The marketing manager argues that a $5,300 increase in the monthly budget to prepare webinars would increase monthly sales by 50 drones. Should the webinar budget be increased?

multiple choice 1

• Yes
• No

2.Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by $90 per unit. The marketing manager believes the higher-quality product would increase sales by 30% per month. Should the higher-quality components be used?

multiple choice 2

• Yes
• No