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Calculate the maximum amount that can be spent

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Question - Azucar Company produces a chocolate almond bar and a peanut butter bar. Information on the two products for the most recent year appears below:

 

Chocolate Almond

Peanut Butter

Selling price per bar

$1.00

$0.50

Variable costs per bar

$0.75

$0.30

Number of bars sold

750,000 bars

250,000 bars

Fixed costs totaled $171,000.

Azucar is considering investing in an advertising campaign that will double the sales volume of the chocolate almond bar. It is the goal of the company to increase next year's profits by 50% over the most recent year's profits. Assume the sales of the peanut butter bar will remain unchanged.

Calculate the maximum amount that can be spent on the advertising campaign.

Reference no: EM132163638

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