Midwest Watchamacallits sells Thingamajigs (“Jigs”) and Thingamaboppers (“Boppers”). In late April the company found itself with only 500 hours of machine time available for the coming month because of the untimely malfunction of an accelerator attached to one of its two operating rod-catch assemblers, which are used in the production of its two products. Although May is not normally a month of high demand, losing one of its two assemblers creates definite problems. Data on the two products are shown here:

Jigs Boppers Selling price per unit $60 $85 Variable costs per unit (30) (40)

Contribution margin per unit $30 $45 Assembler machine hours per unit 0.25 0.50 Expected May demand (units) 1,600 600 Midwest is already committed to pay $1,000 for advertising one (but not both) of the products to increase its demand beyond the estimates shown earlier. The company still has time to select the product to be advertised, however. The marketing department believes that demand for either product could be increased by 100 units with advertising.

Required: Explain how the machine problem would alter the company’s advertising decision. TYK-1