Joeys is a manufacturer with annual sales of 5000 units. It costs them $2 per...
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Joeys is a manufacturer with annual sales of 5000 units. It costs them $2 per unit and they sell at a price of $6 each. Fixed costs to run the business are 160 000 per year.
What is the current total contribution?
Joeys is considering increasing the price to $7.50/unit and increasing its advertising to $4000. This would result in a sales decrease of 33%.
What is the total new contribution?
What is incremental contribution?
Should you go ahead with the adjustment?
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