ABC Company produces two product, Product A and Product B. Information on the two products for the
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Question:
ABC Company produces two product, Product A and Product B. Information on the two products for the most recent year appears below:
.................................Product A...................... Product 8Selling price per unit....... $22...................... $17
Variable costs per unit ....514...................... 812
Number of units sold .....51500........... units 37,800 units
For the most recent year, fixed costs totaled 5547,000.
ABC Company is considering investing in an advertising campaign that will double the sales volume of Product B. It is ABC Company's goal to increase next year's net income by 50% over the most recent year's net income. Assume the sales of Product A are expected to decrease by 25% as some customers who are currently buying Product A will begin purchasing Product B instead.
Calculate the maximum amount that ABC Company can spend on the advertising campaign.
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