Answer:
Available for advertizing campaing 480,000
Explanation:
First we calculate the current operating income:
sales price less all uniit operating cost
90 - 35 - 12 - 8 - 5 - 15 - 8 = 7
$7 x 60,000 units = $420,000 operating income
Now we calculate the new contribution margin and operating income
materials + labor + variable overhead + variable sale = total variable
35 + 12 + 8 + 15 = 70
new contribution margin per unit
98 - 70 = 28
sales 60,000 units less 10% = 54,000 units
<em>contribution margin </em>
28 x 54,000 = 1,512,000
Fixed overhead 300,000
Fixed selling and adming <u> 480,000 </u>
operating income 732,000
<u>Potential contribution from additional sales:</u>
6,000 units x $28 = 168,000
<u>Less: before raising income</u> (420,000)
Available for advertizing campaing 480,000
