Answer:
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Explanation:
Answer:
Effect on income= $9,600 increase
Explanation:
Giving the following formula:
Unitary contribution margin= $90
The marketing manager believes that a $7,500 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales.
<u>To calculate the effect on income, we need to use the following formula:</u>
Effect on income= increase in total contribution margin - increase in fixed costs
Effect on income= 190*90 - 7,500
Effect on income= 17,100 - 7,500
Effect on income= $9,600 increase
To solve this question, first we need to find out the price of a single donut.
12 donuts = $ 6.00
1 donuts = $6.00 / 12
1 donuts = $ 0.50
After that, we just need to multiply the price for a single donut with the required amount (9), which will be:
9 x $ 0.50 = $ 4.50 . . . . for 9 donuts
Answer:
(i) 900 CDs
(ii) Greater than; $1,650
Explanation:
(1) Break-event point will be when the contribution margin from total sales is equal to fixed costs,
Contribution Margin = Selling price - variable cost
= $(21.5 - 9.5)
= $12
Contribution Margin *Number of CDs sold = $10,800
Break-even point for Studio A = 10,800 ÷ 12
= 900 CDs
(2) Studio A would be more profitable when the extra profit earned from per unit sale of CD exceeds the extra fixed cost given in Studio A.
Extra Contribution margin in Studio A = $(12-10)
= $2
Extra Fixed cost in Studio A = $(10,800 - 7,500)
= $3,300
Studio A should be chosen if sales is greater than (3300/2) = $1,650.
