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Your company’s sales are 50,000 units. The unit variable cost is $12. Your markup percent on sales is 40% and your fixed costs are $100,000.

1. What is your profit / loss?

You are thinking of increasing your advertising by $200,000. Based on previous data, you know that for every dollar increase in advertising your sales will go up by $2.

2. Should they go for it or not?

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