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Arrow Products typically earns a contribution margin ratio of 25 percent and has current fixed ossof S o oo Arow's general manager s considering spending
Arrow Products typically earns a contribution margin ratio of 25 percent and has current fixed ossof S o oo Arow's general manager s considering spending an aditional $20.000to do 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 coining year was initilly forecast to equal $1,200,000 that is, witho 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 sates revenue need to increase to make the ad campaign as attractive as the ordering system
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