Answer:
a. increase; increase.
Explanation:
Their total cost will increase by 500
total cost = manufacturing cost + selling and administrative cost
the total cost of selling and administrative will increase by 500
so total cost also increase by the same amount.
Because the cost are higher, the break-even point will also increase
As the fixed cost increased by 500 the company needs to increase their sales to achieve break even
break even = fixed cost / contribution
after the new advertizing cost
break even = (fixed cost + 500) / contribution
The cost increase, so the quotient also increase.
