Calculate contribution margin ratio

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Question - Blossom Orthotics Company distributes a specialized ankle support that sells for $40. The company's variable costs are $30 per unit; fixed costs total $370,000 each year. Calculate contribution margin ratio.

If sales increase by $40,000 per year, by how much should operating income increase?

Last year, Blossom sold 40,000 ankle supports. The company's marketing manager is convinced that a 10% reduction in the sales price, combined with a $52,000 increase in advertising, will result in a 35% increase in sales volume over last year. Compute the projected income. ?Should Blossom implement the price reduction?

Reference no: EM132937401

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