Question 3. 3. Gobi Inc. has sales of $40,000,000. The contribution margin is 40% and the fixed costs are $3,000,000. The variable cost per unit is $12. The company is considering two different strategies for increasing their profits;1. Spend $2,000,000 in advertising, the results is expected to increase the company?s sales by 25%;2. Reduce the price by 20%, the price-demand elasticity is -3.0;Which of the two strategies will generate the highest overall profits?
Paper#35244 | Written in 18-Jul-2015Price : $17