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1. Stratford Company distributes a lightweight lawn chair that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $160,000 annually.

2. Refer to the original data. Assume that the company sold 27,000 units last year. The sales manager is convinced that a 11% reduction in the selling price, combined with a $70,000 increase in advertising expenditures, would increase annual unit sales by 50%.

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