A company typically earns a contribution margin ratio of 25, Ask an Expert

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A company typically earns a contribution margin ratio of 25% and has current fixed costs of $80,000. The general manager is considering spending an additional $20,000 to do one of the following:

1. Start a new ad campaignthat's expected to increase salesrevenue by 5%.

2. License a new computerized ordering system that is expected to increase the comtribution margin ratio by 30%.

Sales revenue for the coming year was initially forecast toequal $1,200,000(without implementing either option)

Question: By what percentage would sales revenue need to increase to make the ad campaign as attractive as the ordering center?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9796782

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