Department A of Racine Company has a gross profit of ($140,000,) representing 35% of net departmental sales.

Question:

Department A of Racine Company has a gross profit of $$140,000,$ representing 35% of net departmental sales. Management believes that an increase of $$36,000$ in advertising will increase volume of product sold by 20%. Other traceable departmental expenses are $$64,000.$ What effect will this decision have on department A’s contribution to common expenses?

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