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Tim Company produces and sells four products. Information about these products for the most recent year is provided below: Product 1 Product 2 selling price
Tim Company produces and sells four products. Information about these products for the most recent year is provided below: Product 1 Product 2 selling price per unit $26 $19 variable costs per unit $ 5 $13 number of units sold 20,000 35,000 Product 3 Product 4 selling price per unit $15 $18 variable costs per unit $ 5 $ 6 number of units sold 13,000 40,000 The fixed costs in the most recent year totaled $644,800. Tim Company is considering investing in an advertising campaign that will double the sales volume of Product 1. Tim wants to increase next year's profits by 25% over the most recent year's profits. Assume the sales of Product 4 are expected to decrease by 40% as some customers who are currently buying Product 4 will switch to Product 1. The sales of Products 2 and 3 will be unchanged. Calculate the maximum amount that can be spent on the advertising campaign.
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