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Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model: Selling price per unit
Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model: Selling price per unit Contribution margin per mit BV19 $ 12 $ HV41 20 $ MV12 10 3 6 2 Units sold per month 3,500 1.500 5.000 Total contribution margin $10,500 $9,000 $10,000 Direct fixed expenses Segment nargin 5,300 3,800 6.200 Allersted company fixed expenses $ 5,200 3,850 $5.200 $ 3.800 1.650 5.500 Operating incone (loss) $ 1.350 $ 3,550 $ (1,700) Required: a. On what basis does the $11,000 of company fixed expenses appear to be allocated? b. Calculate the effect on total company net income if the MV12 model were discontinued. c. Calculate the contribution margin ratio for each model. d. If an advertising campaign focusing on a single model were to result in an increase of 5,000 units in the quantity of units sold, which model should be advertised? e. If an advertising campaign focusing on a single model were to result in an increase of $16,000 in revenues, which model should be advertised?
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