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Kaiser Industries carries no inventories. Its product is manufactured only when a customer's order is received. It is then shipped immediately after it is made.

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Kaiser Industries carries no inventories. Its product is manufactured only when a customer's order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2017, Kaiser's break-even point was $1.3 million. On sales of $1.2 million, its income statement showed a gross profit of $180, 000, direct materials cost of $400, 000, and direct labor costs of $500, 000. The contribution margin was $ 180, 000, and variable manufacturing overhead was $ 50, 000. Calculate the following: Variable selling and administrative expenses. Fixed manufacturing overhead, Fixed selling and administrative expenses. Ignoring your answer to pan (a), assume that fixed manufacturing overhead was $ 100, 000 and the fixed selling and administrative expenses were $80, 000. The marketing vice president feels that if the company increased its advertising, sales could be increased by 25%. What is the maximum increased advertising cost the company can incur and still report the same income as before the advertising expenditure? (CGA adapted)

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