25. Lee produces two products for which the following data have been tabulated.
Per Unit
Selling price
Variable manufacturing cost
Fixed manufacturing cost
Variable selling cost
XY-7 BD-4
$4.00 $3.00
2.00 1.50
.75 .20
1.00 1.00
Fixed manufacturing cost is applied at a rate of $1.00 per machine hour. The sales manager has
had a $160,000 increase in the budget allotment for advertising and wants to apply the money to
the most profitable product. The products are not substitutes for one another in the eyes of the
company's customers. Suppose the sales manager chooses to devote the entire $160,000 to
increased advertising for XY-7. The minimum increase in sales units of XY-7 required to offset
the increased advertising is:
A. 640,000 units.
B. 160,000 units.
C. 128,000 units.
D. 80,000 units.