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ACC - Gobi Inc. has sales of $40,000,000




Question;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 -3.0Which of the two strategies will generate the highest overall profits? Show all calculations!


Paper#41490 | Written in 18-Jul-2015

Price : $22