Music, Music, Music Company has just completed a study suggesting that sales of two of its products, sheet music and CDs, could be increased by spending more on advertising. The following table shows how many additional units of the two products could be sold if advertising for each is increased.

Sheet music has a contribution margin of \(\$ 7.00\) per unit, and CDs have a contribution margin of \(\$ 6.00\) per unit. The company has a total of \(\$ 4000\) to spend on additional advertising. The head of marketing, Harry Hill, has asked your boss for a recommendation about how much to spend on advertising for each product in order to increase profit by the greatest amount, and your boss has passed the question on to you.
Required:
a Calculate the increase in the company's profit if the \(\$ 4000\) is spent on advertising sheet music alone.
b Calculate the increase in the company's profit if the \(\$ 4000\) is spent on advertising CDs alone.
c Calculate the increase in the company's profit if only \(\$ 3000\) is spent on advertising sheet music alone. How do you explain the difference between this increase in profit and the increase in profit you calculated in (a)?
d Write a memo to Mr Hill (sending a copy to your boss) recommending how much additional advertising to spend on each product (up to \(\$ 4000\) total) in order to increase profit by the greatest amount. Be sure to include the reasoning behind your recommendation.

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Amount spent on advertising sheet music $1.000 2000 3000 4000 Amount spent on advertising CDs $1 000 2000 3 000 4 000 Additional sales of sheet music (units) 400 800 1 100 1200 Additional sales of CDs 400 800 1 200 1600