What other ways could you allocate fixed manufacturing price

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Reference no: EM13144252

The home office rejected your proposed budget. This is based on their belief that the loan would not be granted based on your budget. The Plant Manager offers an alternate plan. He wants to increase the advertising budget to $3.8 million (was$3.6M). This he thinks will cause an increase in sales. This would create enough profit to have the loan approved. Assume that the advertising cost is treated as a fixed cost.

Given the comments above, how much would the company’s profit increase? (Hint, use the weighted average contribution margin you calculated in requirement #3. Calculate increase in revenue after additional variable costs then subtract additional fixed cost).

What other ways could you allocate fixed manufacturing costs?

Reference no: EM13144252

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