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Joeys is a manufacturer with annual sales of 5000 units. It costs them $2 per...

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Finance

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.

  1. 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%.

  1. What is the total new contribution?

  1. What is incremental contribution?

  1. Should you go ahead with the adjustment?

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