Sandhill Industries carries no inventories. Its product is manufactured only when a customer's order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2020, Sandhill's break-even point was $1.35 million. On sales of $1.50 million, its income statement showed a gross profit of $257,500, direct materials cost of $500,000, and direct labor costs of $605,000. The contribution margin was $195,000, and variable manufacturing overhead was $51,000.

*assume that fixed manufacturing overhead was $102,000 and the fixed selling and administrative expenses were $76,000. The marketing vice president feels that if the company increased its advertising, sales could be increased by 20%.