Explain strategies resolve generate the highest profits

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Reference no: EM1399564

Forsman Inc. has sales of $10,000,000. The contribution margin is 40% as well as the fixed costs are $1,000,000. The price per unit is $10. The company is considering two diverse strategies for increasing their profits

(a) Spend $800,000 in advertising. The result is predictable to increase the company's sales by 50%.

(b) Decrease the price by 20%. The price-demand elasticity is 2.0.

Which of the two strategies resolve generate the highest profits? Show all calculations

Reference no: EM1399564

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