18-6A

Kaiser Industries carries no inventories. Its product is manufactured only when a customers order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2017, Kaisers break-even point was $1.33million. On sales of $1.19million, its income statement showed a gross profit of $168,000, direct materials cost of $409,000, and direct labor costs of $507,000. The contribution margin was $168,000, and variable manufacturing overhead was $50,000.

(a) Calculate the following: (Round intermediate calculations to 2 decimal places e.g. 2.25 and final answers to 0 decimal places, e.g. 1,225.)

1.	Variable selling and administrative expenses.	$
2.	Fixed manufacturing overhead.	$
3.	Fixed selling and administrative expenses.	$

(b) Ignoring your answer to part (a), assume that fixed manufacturing overhead was $102,000and the fixed selling and administrative expenses were $81,000. The marketing vice president feels that if the company increased its advertising, sales could be increased by19%. What is the maximum increased advertising cost the company can incur and still report the same income as before the advertising expenditure?

Maximum increased advertising expenditure

$