Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost 22,000. If sales are expected to increase 40,000, by how much will the company's net income increase?How do you find the net income increase?
Increased Contribution Margin = $40,000 x 70%, or 28,000.
New ad campaign costs $22,000, so the net Income increase will be the difference, $6,000
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