Week 5, LO 4 Demo - Week 5 Week 5 Skill Building...

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Week 5 Week 5 Skill Building Demonstration Problem 4 Show the effects on contribution margin of changes in variable costs, fixed costs, selling price, and volume. Learning Objective 4 The concept of contribution margin can be used in many decision-making situations. There are five situations that we will be considering: 1. Change in Fixed Cost and Sales Volume 2. Change in Variable Cost and Sales Volume 3. Change in Fixed Cost, Sales Price, and Sales Volume 4. Change in Variable Cost, Fixed Cost, and Sales Volume 5. Change in Selling Price Definitions Change in Fixed Cost and Sales Volume Original Data Roddick Enterprises is currently selling 50 pairs of shoes per month at $30 per pair for total monthly sales of $1,500. Variable costs are $10 per pair. The sales manager feels that a $200 increase in the monthly advertising budget would increase monthly sales by $900 to a total of 80 pairs/shoes. Should the advertising budget be increased? The following table shows the financial impact of the proposed change in the monthly advertising budget:
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Week 5, LO 4 Demo - Week 5 Week 5 Skill Building...

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