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The Moony Company, Which Makes and Sells Two Products, Boys

Question 49

Essay

The Moony Company, which makes and sells two products, boys' and girls' bikes, has $30 000 to spend on advertising. The company has estimated that using the $30 000 to advertise boys' bikes would increase sales of that product by 1000 units. Moony is uncertain, however, how many additional girls' bikes could be sold by spending $30 000 on that product. Boys' bikes have a contribution margin of $40 per unit and girls' bikes have a contribution margin of $30 per unit.
Required:
Prepare an analysis to answer each of the following independent questions.
The Moony Company, which makes and sells two products, boys' and girls' bikes, has $30 000 to spend on advertising. The company has estimated that using the $30 000 to advertise boys' bikes would increase sales of that product by 1000 units. Moony is uncertain, however, how many additional girls' bikes could be sold by spending $30 000 on that product. Boys' bikes have a contribution margin of $40 per unit and girls' bikes have a contribution margin of $30 per unit. Required: Prepare an analysis to answer each of the following independent questions.

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