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Assume that each year a company normally produces and sells 80,000 units of its only product for $40 per unit. The companys average unit costs
Assume that each year a company normally produces and sells 80,000 units of its only product for $40 per unit. The companys average unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 10.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 5.00 Variable selling expenses 1.70 Fixed selling expenses 4.50 Total cost per unit $ 33.50 The companys relevant range of production is 70,000 - 100,000 units. It believes that spending an additional $155,000 on advertising would increase unit sales by 25%. What is the financial advantage (disadvantage) of spending the additional money on advertising
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