
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses
by $10,000 and found that sales increased by $30,000. Was it a good decision to increase
advertising expenses? Suppose that the contribution margin ratio is now 0.4. Would it be
a good decision to increase advertising expenses?
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