Question
Break-even analysis: The Lublock Specialty Products Company manufactures a product which sells for $5. At present the company produces and sells 50,000 units per
Break-even analysis: The Lublock Specialty Products Company manufactures a product which sells for $5. At present the company produces and sells 50,000 units per year. Unit variable manufacturing and marketing expenses are $2.50 and $.50 respectively. Fixed expenses are $70000 for factory overhead and $ 30000 for marketing and administration. The Sales Manger has proposed that the price be increased to $6. To maintain the present sales volume, advertising must be increased. The company's profit objective is 10% of sales. Required: 1. The additional expenditure the company can afford for advertising. 2. The new break-even point in units and dollars, using the $6 sales price and the additional advertising expenditure, from requirement.
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