Q3 pre test

Question 3 of 6 This quiz: 6 point(s) possible This question: 1 point(s) possible The Cocoa World Candy Company produces a single product: a chocolate almond bar that sells for $0.40 per bar. The variable costs for each bar (sugar, chocolate, almonds, wr $0.20. The total monthly fixed costs are $75,000. Last month, bar sales reached 1 million. However, the president of Cocoa World Candy Company was not satisfied with its perfo considering the following options to increase the company's profitability: 1. Increase advertising. 2. Increase the quality of the bar's ingredients and simultaneously increase the selling price. 3. Increase the selling price with no change in ingredients Read the requirements. Requirement (a) The sales manager is confident that an intensive advertising campaign will double sales volume. If the company president's goal is to increase this month's profits last month's, what is the maximum amount that can be spent on advertising that doubles sales volume? Enter the formula you will use to solve for maximum amount that can be spent on advertising in the current month. (Abbreviations used: CM = Contribution margin, SP = Sales price (SP per unit x Units) (VC per unit x Units) (Fixed costs + Advertising) = Profit Now calculate the amount that can be spent on advertising by solving for the unknown advertising costs. The maximum amount that can be spent on advertising is $ 60,000 Requirement (b) Assume that the company increases the quality of its ingredients, thus increasing variable costs to $0.45 per bar. By how much must the selling price per unit be in the same breakeven point in units? Begin by calculating the breakeven point with the original variable costs, First enter the formula, then calculate the breakeven point. = Breakeven units M (N O Apr 23