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, 2020, Kaiser's break-even was$1.3million. On sales of$1.2million, 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$144,000, and variable manufacturing overhead

was$50,000.

Ignoring your answer to part (a) assume that fixed manufacturing overhead was$100,000and the

fixed selling and administrative expenses was$80,000. The marketing Vice President feels that

if the company increased its advertising, sales could be increased by25%. What is the maximum

increased advertising cost the company can incur and still report the same income as before the

advertising expenditure?