Sandhill Orthotics Company distributes a specialized ankle support that sells for $40. The companys variable costs are $28.00 per unit; fixed costs total $360,000 each year.

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

Contribution margin ratio

.......%

If sales increase by $43,000 per year, by how much should operating income increase? (Use the rounded contribution margin ratio calculated in the previous part.)

Change in operating income

$.............

Last year, Sandhill sold 36,000 ankle supports. The companys marketing manager is convinced that a 12% reduction in the sales price, combined with a $46,000 increase in advertising, will result in a 36% 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

$ ..............

Sandhill (should 0r shouldn't) implement the price reduction because the estimated operating income

is ( more Or less ) than the current operating income.