Arrow products typically earns a contribution margin ratio

Assignment Help Accounting Basics

Reference no: EM13568610

Arrow Products typically earns a contribution margin ratio of 25 percent and has current fixed costs of $80,000. Arrow's general manager is considering spending an additional $20,000 to do one of the following:

1.Start a new ad campaign that is expected to increase sales revenue by 5 percent.

2.License a new computerized ordering system that is expected to increase Arrow's contribution margin ratio to 30 percent.

Sales revenue for the coming year was initially forecast to equal $1,200,000 (that is, without implementing either of the above options).

a.For each option, how much will projected operating income increase or decrease relative to initial predictions?

b.By what percentage would sales revenue need to increase to make the ad campaign as attractive as the ordering system?

Reference no: EM13568610

Questions Cloud

Mcdougall corporation is authorized to issue 500000 shares : a the charter of the sanders corporation authorizes the issuance of 1500000 shares of no-par common stock and 500000

Tom skinner has 45000 invested in a stock with a beta of 08 : tom skinner has 45000 invested in a stock with a beta of 0.8 and another 55000 invested in a stock with a beta of

Jim wayman is considering opening a kwik oil change center : jim wayman is considering opening a kwik oil change center. he estimates that the following costs will be incurred

Borrell company purchased 4 delivery trucks on january 2 : borrell company purchased 4 delivery trucks on january 2 2013 for 22000 each. borrell expected 2 of the trucks to last

Arrow products typically earns a contribution margin ratio : arrow products typically earns a contribution margin ratio of 25 percent and has current fixed costs of 80000. arrows

What is the break-even tax rate that would make a taxable : aaa-rated municipal bonds are carrying a market yield today of 5.25 percent while aaa-rated corporate bonds have

What type of information does a comparison of the present : what type of information does a comparison of the present value of the cash flows of a portfolio and its benchmark

Amess net income for the year ended december 31 2013 is : information from the financial statements of ames fabricators inc. included the followingdecember 3120132012common

Prepare a sales journal entry based on the information : prepare a cash receipts journal based on the information given below and post it to the accounts receivable subsidiary

User Account

All Pages