Waec Model Questions Vol1 2018 Commerce Question 21

A company plans an advertising campaign for a single product. The campaign incurs a fixed advertising cost of ₦500,000 for Product X and a variable advertising cost equal to 2% of the gross sales generated from Product Y. The expected sales increase from the campaign is 600 units of Product X and 300 units of Product Y. Each unit of Product X sells for ₦14,000 and yields a contribution margin of 22% of its selling price. Each unit of Product Y sells for ₦25,000 and yields a contribution margin of 18% of its selling price. The company wants the overall Advertising Efficiency Index (AEI), defined as total advertising cost divided by total contribution from both products, to be exactly 0.25. Determine the additional fixed advertising cost (in whole naira) that must be added to the variable cost of Product Y to achieve the target AEI. Round the answer to the nearest thousand naira.