Question 8

[The following information applies to the questions displayed below.) Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $516 each. Costs 1. Plastic for casing-$19,000 2. Wages of assembly workers--$90,000 3. Property taxes on factory-$7,000 4. Accounting staff salaries-$33,000 5. Drum stands (1.000 stands purchased)-$35,000 6. Rent cost of equipment for sales staff-$36.000 7. Upper management salaries-$170,000 8. Annual flat fee for factory maintenance service--$16,000 9. Sales commissions-$25 per unit 10. Machinery depreciation, straight-line-$42,000 8) Increase Fixed Costs: TrueBeat's management is also considering purchasing additional advertising for $40,000. Marketing studies suggest that sales will increase by 200 units a year. Should the company purchase the additional advertising? Your answer should use complete sentences and contain 30 to 50 words. Support your answer with calculations of at least 2 of the following items. (a) Net Operating Income, (b) Break-even in units or dollars,(e) target sales in units or dollars to maintain the same Net Income as originally assumed for year 4. You may also use other calculations that you feel are relevant. Remember to treat this scenario as independent from the items considered in 6) and 7)