Posted: August 23rd, 2016

Calculate the contribution margin ratio for each model.

Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model:
[TABLE]
Required:
(a) On what basis does the $30,000 of company fixed expenses appear to be allocated?
(b) Calculate the effect on total company net income if the MV12 model were discontinued. (Omit the “$” sign in your response.)
The net income would by $
(c) Calculate the contribution margin ratio for each model. (Round your answers to 1 decimal place. Omit the “%” sign in your response.)
BV19 HV41 MV12
Contribution margin ratio % % %
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(d) If an advertising campaign focusing on a single model were to result in an increase of 5,000 units in the quantity of units sold, which model should be advertised?
(e) If an advertising campaign focusing on a single model were to result in an increase of $15,000 in revenues, which model should be advertised?