Carla Vista Orthotics Company distributes a specialized ankle support that sells for $55. The companys variable costs are $41.25 per unit; fixed costs total $380,000 each year.

A) Calculate contribution margin ratio?

B) If sales increase by $39,000 per year, by how much should operating income increase?

C) Last year, Carla Vista sold 38,000 ankle supports. The companys marketing manager is convinced that a 12% reduction in the sales price, combined with a $51,000 increase in advertising, will result in a 40% increase in sales volume over last year.

*Projected income?

Should Carla Vista implement the price reduction?

Carla Vista __ implement the price reduction because the estimated operating income is __ than the current operating income.