Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable...
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Accounting
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $200,000 per year.
Assume the company sold 43,500 units last year. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1.60 per unit. He thinks that this move, combined with some increase in advertising, would double annual unit sales. By how much could advertising be increased with profits remaining unchanged? Do not prepare an income statement; use the incremental analysis approach.
The amount by which advertising can be increased is = ?
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