Wildhorse Industries 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, 2020, Wildhorses break-even point was $1.37 million. On sales of $1.18 million, its income statement showed a gross profit of $189,400, direct materials cost of $402,000, and direct labor costs of $505,000. The contribution margin was $153,400, and variable manufacturing overhead was $51,000.

Calculate the following:

1.Variable selling and administrative expenses

2.Fixed Manufactoring overhead

3.fixed selling and administrative expenses

Ignore your answer to above part, assume that fixed manufacturing overhead was $101,000 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 19%. What is the maximum increased advertising cost the company can incur and still report the same income as before the advertising expenditure?

Find Maximum increased advertising expenditure: