Dans Data Storage (DDS) is located in Calgary, AB and holds 6.17% share of the total annual market of 62,743 solid state backup storage devices. DDS provides its retailers with a margin of 37% on the retail price. The Retail price is $2153.00 per storage device. Brenda Smith, DDSs controller estimates that the production variable costs are $813.18 per storage unit and Fixed Production costs are $357,000 per year. In addition, shipping and packing costs of $59.12 per unit paid by DDS. Management costs are $181,000 per year, annual advertising budget is $115,325 and the company has one sales person with a salary of $93,750 (no commission percentage)

1. The VP of Marketing thinks that DDS can sell 6.5% more storage devices than it does currently increasing advertising budget by $32,000. Alternatively, if she reduces the advertising budget but $35,000, she estimated she will sell 47 fewer units.
   1. What would be the Total Revenue if the advertising budget was raised? (3 marks)

2. What would be the Break Even in units if the advertising budget was lowered? (3 marks)

2. An Alternative to changing in advertising spending, DDS is considering offering one Free storage file sorter with every storage device sold. These sorters cost DDS $41 each. If this promotional offer can increase storage device sales by 212 units, what would be the Change in profits? (No Change in Advertising) (5 marks)

3. What would you advice the VP of marketing to do? Change advertising spending (raising or lowering) or offer the file sorter as Promotion or Do nothing. Need to explain in detail WHY? (4 marks)