Sandhill Orthotics Company distributes a specialized ankle support that sells for $40. The companys variable costs are $30 per unit; fixed costs total $370,000 each year.

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

Contribution margin ratio

enter contribution margin ratio in percentages rounded to 0 decimal places %

If sales increase by $62,000 per year, by how much should operating income increase? (Use the rounded contribution margin ratio calculated in the previous part.)

Change in operating income

$enter change in operating income amount in dollars

Last year, Sandhill sold 42,000 ankle supports. The companys marketing manager is convinced that a 10% reduction in the sales price, combined with a $49,000 increase in advertising, will result in a 40% 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).)

Projected income

$enter projected income amount in dollars

Should Sandhill implement the price reduction?

Sandhill select an option should or should not implement the price reduction because the estimated operating in