Egg Ene 2 GIVEN: 3 Per Unit % of Sales 4 Selling Price 90 100% 5 Variable Expenses 63 70% 6 Contribution Margin 27 30% 7 8 Fixed expenses are 30,000 per month and the company is selling 2,000 units per month. 9 1. The marketing manager believes that a 5,000 increase in advertising would increase 10 monthly sales by $9,000. Should the advertising budget be increased? 11 12 If sales increase by $9,000, how many more UNITS is that? 13 Current Contribution Margin Inc Stmt Changed Contribution Margin Inc Stmt 14 15 16 17 18 19 20 21 22 2. Refer to the original data. Management is considering using higher quality components 23 that would increase the variable cost by $2/unit. The marketing manager believes that the higher 24 quality component would increase monthly sales by 10% per month. Should we do it? 25 26 27 28