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Data for Whiteworth Ltd. are shown below: Fixed expenses are $25,000 per month,...

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Question

Accounting

Data for Whiteworth Ltd. are shown below:
Fixed expenses are $25,000 per month, and the company is selling 2,000 units per month.
Required:
The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $8,000.
Should the advertising budget be increased?
Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by $2.00
per unit. The marketing manager believes the higher-quality product would increase sales by 10% per month. Should the higher-quality
components be used?
image

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