L&M

Manufacturing produces a single product that sells for $16. Variable (flexible) costs per unit equal $11.20. The company expects the total fixed

(capacityminusrelated)

costs to be $7,200 for the next month at the projected sales level of 20,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.

Suppose that L&M Manufacturing's management believes that a $1,600 increase in the monthly advertising expense will result in a considerable increase in sales. How much must sales increase in a month to justify this additional expenditure?

A.

334 units

B.

200 units

C.

500 units

D.

None of the above is correct.