Joeys is a manufacturer with annual sales of 5000 units It costs them $3 per unit and they sell at a price of $6 each The fixed costs to run the business are 160 000 per year What is the current total contribution Joeys is considering increasing the price to $7 50 unit and increasing its advertising to $4000 This would result in a sales decrease of 30 What is the total new contribution What is the incremental contribution Should you go ahead with the adjustment

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Joeys is a manufacturer with annual sales of 5000 units. It costs them $3 per unit and they sell at a price of $6 each.

Joeys is a manufacturer with annual sales of 5000 units. It costs them $3 per unit and they sell at a price of $6 each. The fixed costs to run the business are 160 000 per year.

What is the current total contribution?

Joeys is considering increasing the price to $7.50/unit and increasing its advertising to $4000. This would result in a sales decrease of 30%.

What is the total new contribution?

What is the incremental contribution?

Should you go ahead with the adjustment?

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