Question 5.2 As part of the planning for Ciderman (introduced in topic 4), the following information has been estimated:

Units produced and sold 2500 units

Estimated revenue $3,500,000

Estimated mark-up on full cost 15%

Desired rate of return on investment 17%

Estimated variable cost per unit $550

1. Calculate the following items: a. Full cost of production per unit b. Selling price per unit c. Percentage mark-up on variable cost d. Total fixed costs

2. The Karmichaels' have consulted with their management accountant and the its is estimated that increasing the annual advertising spend for the first year by another $250,000 could result in an increase in the number of units by 12%. Make a recommendation regarding whether this additional investment should be done (show any calculations to support your recommendation).