Answered step by step
Verified Expert Solution
Question
1 Approved Answer
CleanCo has considerable excess manufacturing capacity. The following data pertain to current sales and profit. Sales per month $140,000 Contribution margin ratio 60% Profit margin
CleanCo has considerable excess manufacturing capacity. The following data pertain to current sales and profit.
Sales per month | $140,000 |
Contribution margin ratio | 60% |
Profit margin | 10% |
CleanCo plans to incur a fixed advertising expense of $12,000 next month to promote lower prices. The price cut will reduce contribution margin ratio to 50%.
Requried: Suppose CleanCo runs the promotion. Calculate the incremental sales revenue that CleanCo needs to maintain the current level of profit (in $).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started