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Please answer the two questions with Explanation step by step! Question 1: Dubai Company has reported the following budget data: Sales........... .150,000 units Selling price...
Please answer the two questions with Explanation step by step! Question 1: Dubai Company has reported the following budget data: Sales........... .150,000 units Selling price... ..$25 per unit Variable expense... ............$15 per unit Fixed manufacturing expenses... ..$800,000 Fixed selling and admin. expenses..... ..$700,000 An advertising agency claims that an advertising campaign would enable the company to increase its sales by 20%. What is the maximum amount that the company can pay for advertising and obtain a net operating income of $200,000? Explain your answer. Question 2: Sharjah Company manufactures and sells a single product with a positive contribution margin. If the selling price and the variable expense per unit both increase by 5%, and fixed expenses do not change, what is the effect on the contribution margin per unit and the contribution margin ratio? Explain your answer by providing a numerical example
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