Unformatted text preview: Loss of wall paper contribution margin $(28,000) Remodeling $(12,400) Added profitability from carpet sales* $65,000 Fixed Cost Savings $18,000 Decreased Contribution Margin from paint & supplies $(30,400) Increased Advertising $(25,000) Total Income (loss) from closure $(12,800) * The current contribution margin ratio for carpeting is 30% ($138000/$460000) This ratio will increase to 35%, producing a new contribution for the line $203,000 [($460000 + $120000) x 35%] The end result is that the carpeting's contribution margin will rise by $65,000 ($203000 - $138000) boosting the firm profitability by the same amount...
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This note was uploaded on 02/29/2012 for the course E 101 taught by Professor Sfere during the Spring '12 term at Abilene Christian University.
- Spring '12
- Contribution Margin