A company has two product lines, shoes and hats. Costand revenue for each line for the current month follows:
Product lines
shoes hats
sales...................................... $ 800,000 $450,000
variable costs as a percentage ossales........ 55% 28%
fixed costs traceable to productlines......... $200,000 $ 250,000
The company incurs monthly fixed costs of $ 100,000 common toboth product lines.
Assume that a marketing survey shows that a $75,00 monthly advertising campaign focused on either product line should increasethat product line's monthly slaes by apprpx. $150,000. Do you recommend this additional advertising for either or both product lines? Show computations.