Part A Bell Magnum Helmet Ltd successfully makes high quality bicycle helmets. Recently increased competition from overseas suppliers has led to the decision to begin a strong advertising campaign in the next year. The companys accountant presented to management the following summarised financial information for the current year. Variable Costs per helmet ($) Direct Materials 8.00 Direct Labour 16.00 Variable selling costs 6.00 Total 30.00 Fixed Costs ($) Manufacturing 50,000 Selling 80,000 Administrative 140,000 Total 270,000 Expected Current Year Sales (20,000 helmets @$50) $1,000,000

Required

Assume that the company wants to increase the sales commission by $2 per unit and also increase spending on advertising to achieve double the annual unit sales. By how much could advertising be increased with profits remaining unchanged? Use the incremental analysis approach.