Question
42 Assume that each year a company normally produces and sells 80,000 units of its only product for $40 per unit. The company's average unit
42 Assume that each year a company normally produces and sells 80,000 units of its only product for $40 per unit. The company's average unit costs at this level of activity are given below. Direct materials Direct labor Variable manufacturing overhead Pixed manufacturing overhead, Variable selling expenses Fixed selling expenses Total cost per unit $ 9.50 10.00 2.80 5.00 1.70 4.50 $33.50 The company's relevant range of production is 70,000 100,000 units. It believes that spending an additional $175,000 on advertising would increase unit sales by 25%. What is the financial advantage (disadvantage) of spending the additional money on advertising? Multiple Choice $85,000 $79,000 $10,000 O $145,000
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