Cloris Tool and Die, located in Cleveland, OH enjoys a 4% share of a total market of 75,000 class C filtration units per year(the retail price is $2,000 per unit). Jenna Johnson, the president, estimates that variable production costs amount to $750 per unit and fixed manufacturing cost total $275,000 per year. In addition, shipping and packaging cost are $70,000 and the annual advertising budget is $100,000. Cloris employs one sales representative at a salary of $40,000 per year.
If Johnson reduces the advertising budget by $20.000 she expects to 75 fewer units. should he lower her advertising budget