San Diego State University Operations And Supply Chain Management Assignment Help - Production

Question - Red Rock, Inc. mines and distributes various types of rocks. Most of the company's rock is sold to
contractors who use the product in highway construction projects. Aracely Hudson, company
president, believes that the company needs to advertise to increase sales. She has proposed a plan
to the other managers that Red Rock, Inc. spend $92,000 on a targeted advertising campaign. The
company currently sells 26,000 tons of aggregate for total revenue of $5,420,000. Other data related
to the company's production and operational costs follow:
Direct labor $1,460,000
Variable production overhead 230,000
Fixed production overhead 380,000
Selling and administrative expenses:
Variable 53,000
Fixed 327,000
Required:
A. Compute the break- ...Read More even point in units (i.e., tons) for Red Rock, Inc. If required, round interim
calculations to 2 decimal places, use your rounded number in subsequent calculations, and round
your answer to nearest whole number.
______ tons
B. Compute the contribution margin ratio for Red Rock, Inc. Round your answer to two decimal
places. Ensure that answer is entered in decimals and not in percentages.
______
C. If Aracely decides to spend $100,000 on advertising and the company expects the advertising to
increase sales by $200,000, should the company increase the advertising?
If the company increases the advertising, the contribution margin will (increase / decrease) by
$______ and net income will (increase / decrease) by $_______. ...Read Less

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