The next four questions refer to a fictional fast food company:

The following cost information pertains to the meals made by the company:

Food $2.50/meal

Franchisor Royalties $0.70/meal

Advertising & Promotion $300,000

Rent $100,000

Price of each meal $10.00

What is the gross marketing contribution per unit?

If the company sold 100,000 meals and decided that they wanted to increase the advertising expense by $25,000 to generate more sales, how many more meals would they have to sell to maintain their current contribution to the organization

Assume I want to become more competitive from a price perspective , and I consider lowering my prices by 15%, and I want to accompany this change with a major advertising campaign, which will cost $15,000. How must my sales change for me to preserve my contribution to the organization?

What percentage of current sales does this represent?