BlossomOrthotics Company distributes a specialized ankle support that sells for $30. The company's variable costs are $18per unit; fixed costs total $360,000each year.

A1. Calculate contribution margin ratio.(Round ratio to 2 percentage places, e.g. 0.38 = 38%.)

A2. If sales increase by $39,000per year, by how much should operating income increase?(Use the rounded contribution margin ratio calculated in the previous part.)

B. Last year,Blossomsold32,000ankle supports. The company's marketing manager is convinced that a10% reduction in the sales price, combined with a $45,000increase in advertising, will result in a25% increase in sales volume over last year.

Compute the projected income.(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

1. Projected income =
2. ShouldBlossomimplement the price reduction?

Blossom(should not or should) implement the price reduction because the estimated operating income is( less or more)

than the current operating income.