Final answer:
Without knowing the profit margin per unit for Racing Bicycle, it's impossible to determine the exact profit impact of increasing sales by 40 units when also increasing the advertising budget by $10,000. We would need to know the additional revenue and then subtract the increased advertising costs to find the net profit impact.
Step-by-step explanation:
To calculate the profit impact for Racing Bicycle with an increase in unit sales from 500 to 540 and an increased advertising budget by $10,000, we would need to know the profit margin per unit sold. However, the provided numbers do not seem to directly relate to this scenario, and without additional data such as the unit cost and selling price, it's not possible to accurately determine the change in profits.
Generally, the additional revenue generated from selling more units can be calculated by multiplying the additional units sold by the profit per unit. Then, to find the net increase in profit, we subtract the increased advertising costs from the additional revenue.
If for example, Racing Bicycle makes a profit of $50 per unit, the additional revenue from selling 40 more bicycles would be $50 times 40 units, which equals $2,000 in added revenue. If we subtract the additional $10,000 in advertising, this would actually result in a net decrease of $8,000 in profit. However, the decision-maker should also consider the long-term benefits of increased advertising such as brand awareness and customer acquisition.