Tiktok Company distributes a lightweight lawn chair that sell for P150 per unit. Variable costs are P60 per unit, and fixed costs total P1,800,000 annually. Assume that the company sold 28,000 units last year. The president feels that it would be unwise to change the selling price. Instead, he wants increase the sales commission by P20 per unit. He thinks that this move, combined with some increase in advertising, would cause annual sales to double. By how much could advertising be increased with profits remaining unchanged?
Tiktok Company distributes a lightweight lawn chair that sell for P150 per unit. Variable costs are P60 per unit, and fixed costs total P1,800,000 annually. Assume that the company sold 28,000 units last year. The president feels that it would be unwise to change the selling price. Instead, he wants increase the sales commission by P20 per unit. He thinks that this move, combined with some increase in advertising, would cause annual sales to double. By how much could advertising be increased with profits remaining unchanged?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tiktok Company distributes a lightweight lawn chair that sell for P150 per unit. Variable costs are P60 per unit, and fixed costs total P1,800,000 annually. Assume that the company sold 28,000 units last year. The president feels that it would be unwise to change the selling price. Instead, he wants increase the sales commission by P20 per unit. He thinks that this move, combined with some increase in advertising, would cause annual sales to double. By how much could advertising be increased with profits remaining unchanged?
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