a firm produces two products. Fixed manufacturing cost is applied at a rate $1.00 per machine hour.

Per unit XY-7 BD-4 Selling price $4.00 $3.00 Variable manufacturing cost 2.00 1.50 Fixed manufacturing cost 0.75 0.20 Variable selling cost 1.00 1.00

The sales manager had a $160,000 increase in the budget for advertising. The products are not substitute for one another in the eye of the companys customers.

1. Suppose the sales manager chooses to devote the entire $160,000 to increase advertising for XY-7. The minimum increase in sales units of XY-7 required is: a. 640,000 units b. 160,000 units c. 128,000 units d. 80,000 units

2. Suppose the sales manager chooses to devote the entire $160,000 to increased advertising for BD-4. The minimum increase in sales dollars of BD-4 required to offset the increase advertising would be: a. $160,000 b. 320,000

c. 960,000 d. 1,600,000