Super Computer Corp. carries no inventories. Its product is manufactured only when a customers order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2022, the companys break-even point was USD2.4 million. On sales of USD2 million, its income statement showed a gross profit of USD400,000, direct materials cost of USD600,000, and direct labor costs of USD700,000. The contribution margin was USD150,000, and variable manufacturing overhead was USD200,000.

Instructions:

(a) Calculate the following:

1. Variable selling and administrative expenses.

2. Fixed manufacturing overhead.

3. Fixed selling and administrative expenses.

(b) Ignoring your answer to part (a), assume that fixed manufacturing overhead was $100,000 and the fixed selling and administrative expenses were $80,000. The marketing vice president feels that if the company increased its advertising, sales could be increased by 15%. What is the maximum increased advertising cost the company can incur and still report the same income as before the advertising expenditure?