Hi,

Would you be able to help identify if the additional advertising in this context is considered a fixed, variable or mixed costs?

Suppose Hendon Company is considering spending more on advertising in the year 2020. They estimate that sales would increase by $200,000 (compared to the year 2019) with extra advertising costing $168,000. Describe how to use CVP analysis to explain whether the company should go ahead with the plan. Show workings. --> 6 marks

Would also be great if you can guide us to explain how we can use CVP to decision make as this is a past year paper question :)!

Thank You!