(a) Let x = additional advertising outlay. Sales $300,000 Less: Variable costs 150,000 CM $150,000 Fixed costs 100,000 Additional Net income $ 30,000 Thus, x = $20,000. (6) Break-even sales in units $100.000 + $20,000 $6 - $3 = 40,000 units Break-even sales in dollars - 40.000 units X $6 - $240,000 h8 4.12 Ro Company, a manufacturer of quality handmade pipes, has experienced a steady growth in its sales for the past five years. Increased competition, however, has led the president, Mr. Ro, to believe that an aggressive advertising campaign will be necessary next year to maintain the company's present growth. To prepare for next year's advertising campaign, the company's accountant presents the following data for the current year, 19A: Variable costs (per pipe): Direct labor $ 8.00 Direct materials 3.25 Variable overhead 2.50 Total variable costs $ 13.75 Fixed costs: Manufacturing $ 25,000 Selling 40,000 Administrative 70,000 Total fixed costs $135,000 Sales price per pipe $ 25 Expected sales, 19A (20,000 pipes) $500,000 Income tax rate 40% Mr. Ro has set the 19B sales target at a level of $550,000, or 22,000 pipes. Determine the following: (a) The projected after-tax net income for 19A; (b) the break-even sales in units for 19A; (c) the after-tax net income for 19B if an additional fixed selling expense of $11,250 is spent for advertising in 19B in order to attain the 19B sales target; (d) the break-even sales in dollars for 19B if the additional $11,250 is spent for advertising: (e) the sales in dollars required to equal 19A's after-tax net income, if the additional $11.250 is spent for advertising in 19B; and the maximum amount that can be spent on advertising at a sales level of 22,000 pipes, if an after-tax net income of $60,000 is desired