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XYZ has contribution margin of 30% with fixed costs of $550,000. Next year, sales are projected to be $3,100,000. An advertising with additional $120,000 is being evaluated. How much would sales have to increase to justify the additional ad expense

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abiolataiwo2015

Answer:

$400,000

Explanation:

Calculation to determine How much would sales have to increase to justify the additional ad expense

Using this formula

Required sales=Additional advertising value/Fontribution margin

Let plug in the formula

Required sales = $120,000 / 0.3

Required sales = $400,000

Therefore How much would sales have to increase to justify the additional ad expense is $400,000

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