The group product manager for ointments at American Therapeutic Corporation was reviewing price and promotion alternatives for two products: Rash Away and Red Away. both Products were designed to reduce skin irritation, but red away was primarily a cosmetic treatment where as rash away also included a compound that eliminated the rash.

The price and promotion alternatives recommended for the two products by their respective brand mangers included the possibility of using additional promotion or a price reduction to stimulate sales volume. A volume, price, and cost summery for the products is as follows.

Rash Away Red Away

Unit Price $2.00 $1.00

Unit Variable Costs $1.40 $0.25

Unit Contribution $0.60 $0.75

Unit Volume 1,000,000 1,500,000

Both Brand Managers included a recommendation to either reduce price by 10 percent or invest an incremental $150,000 in advertising.

A-

What absolute increase in unit sales and dollars sales will be necessary to recoup the incremental increase in advertising expenditures for Rash Away? For Red Away"