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Rock is sold to contractors who use the product in construction projects. Needs to increase sales by advertising. Spend $100,000 advertising campaign. currently sells 25,000 tons for a total revenue of $5,000,000.Direct Labor...............$1,500,000Variable production overhead...........200,000fixed production overhead.................350,000
Selling and admministrative expensesVariable...................................50,000fixed........................................300,000a. Compute break-even point in units (i.e. tons)b. Compute the contribution margin ratioc. will spend $100,000 on advertising and the company expects the advertising to increase sales by $200,000. Should the company increase advertising and Why?
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