Joey’s is a manufacturer with annual sales of 5000 units. It costs them $2 per unit...
Joey’s is a manufacturer with annual sales of 5000 units. It costs them $2 per unit and they sell at a price of $6 each. Fixed costs to run the business are 160 000 per year.
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What is the current total contribution?
Joey’s is considering increasing the price to $7.50/unit and increasing its advertising to $4000. This would result in a sales decrease of 33%.
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What is the total new contribution?
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What is incremental contribution?
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Should you go ahead with the adjustment?
Homework Answers
Contribution Margin = Sales – Variable costs
= (6-2)*5000
= $20,000
Total new contribution = (7.50-2)*3350
= $18,425
No, since total contribution margin has reduced
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Joey’s is a manufacturer with annual sales of 5000
units. It costs them $2 per unit...
Joey’s is a manufacturer with annual sales of 5000 units. It costs them $2 per unit...
Joey’s is a manufacturer with annual sales of 5000 units. It costs them $2 per unit and they sell at a price of $6 each. Fixed costs to run the business are 160 000 per year. What is the current total contribution? Joey’s is considering increasing the price to $7.50/unit and increasing its advertising to $4000. This would result in a sales increase of 33%. What is the total new contribution? What is incremental contribution? Should you go ahead...
Can you help with this Question 3 (4 points) Yoyo's is an ice cream manufacturer with...
Can you help with this
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Can you help with this
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