The Foundational $15($Algo$)[$LO$7-1,$ LO$7-2,$ LO$7-3,$ LO$7-4,$ LO$7-5]$

$[$The following information applies to the questions displayed below.$]$

Diego Company manufactures one product that is sold for $$75$ per unit in two geographic regions$-$the East and West

regions. The following information pertains to the company's first year of operations in which it produced $57,000$ units and

sold $52,000$ units.

Variable costs per unit:

Manufacturing:

Direct materials $$25$

Direct labor $ $$18$

Variable manufacturing overhead $$3$

Variable selling and administrative $$5$

Fixed costs per year:

Fixed manufacturing overhead $$627,000$

Fixed selling and administrative expense $$645,000$

The company sold $36,000$ units in the East region and $16,000$ units in the West region. It determined that $$310,000$ of its

fixed selling and administrative expense is traceable to the West region, $$260,000$ is traceable to the East region, and the

remaining $$75,000$ is a common fixed expense. The company will continue to incur the total amount of its fixed

manufacturing overhead costs as long as it continues to produce any amount of its only product.

Foundational $7-15($Algo$)$

Assume the West region invests $$47,000$ in a new advertising campaign in Year $2$ that increases its unit sales by $20\%.$ If all else

remains constant, what would be the profit impact of pursuing the advertising campaign?