Chaps&Saddles, a retailer of tack and Western apparel, earns an average contribution margin of 45 percent on its sales volume. Recently, the advertising manager of a local “country” radio station offered to run numerous radio advertisements for Chaps&Saddles at a monthly cost of $ 1,800.
Compute the amount by which the proposed radio advertising campaign must increase Chaps&Saddles’s monthly sales volume to:
a. Pay for itself.
b. Increase operating income by $1,000 per month. (Round computations to the nearest dollar.)
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