You are pitching a marketing proposal to a company that sells electronic equipment. For a particular product line, their current sales price is $20 per unit, cost is $9 per unit and they have $20,000 in fixed costs associated with this line. Last year, they sold 8,200 units. You are proposing that the company implement your marketing plan which will cost $3,000 per year. You believe this will increase their sales units by 350 units. Calculate the contribution margin ratio at the projected levels, the projected change in operating income of your proposal and the projected ROI. Additionally, if the company requires a 12% return on its investments, calculate the maximum you could charge for your marketing plan.

Operating Income Effect 3 ROI Maximum Charge Contribution Margin Ratio