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W JUIC. , VII pis P 9-5 (similar to) Question Help Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend 545 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by 510 2 million this year and 58.2 million next year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomochis other products. As a result, sales of other products are expected to rise by $2 3 million each year Kokomochi's gross profit margin for the Mini Mochi Munch is 36% and its gross profit margin averages 20% for all other products. The company's marginal corporate tax rate is 35% both this year and next year. What are the incremental earnings associated with the advertising campaign? Complete the table below. (Round to the nearest dollar) Incremental Earnings Forecast Sales of Mini Mochi Munch Other Sales Cost of Goods Sold Gross Profit Selling, General, and Admin Expenses Depreciation EBIT Income tax at 35% Unlevered Net Income Enter any number in the edit fields and then click Check Answer Check Answer Clear All 1 remaining 1 part

Answer 1

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PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) View Add-Ins Formulas Data Review - 2x 11 A = = = V Wrap Text General A A E = 5 st Fat Merge Center $ % , .0 .00 File Home Insert Page Layout * Cut Calibri E Copy Paste Format Painter BI U. 3 Clipboard Font TD141 TE Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Σ AutoSum : A Fill Sort & Find & 2 Clear Filter Select Editing Alignment Number Cells TD TE TG TH TL TJ TK TL TMI TN 125 advertising expense is a revnue expense so fully shown under head SG&A expenses 126 notes 127 128 129 130 10.2 million in year 1 8.2 million in year 2 sales will increase by Gross profit margin is 36% so gross profit = 3.672 [36% x 10.2] 2.952 [36% x 8.2] 131 132 2.3 million in year 1 2.3 million in year 2 133 134 135 sales of other products increase by Gross profit margin is 20% so gross profit = 0.46 [20% x 2.3] 0.46 [20% x 2.3] 136 so total sales will be total gross profit will be so cost of goods sold will be 12.5 (10.2 +2.3] 4.132 [3.672 +0.46] 8.368 (SALES - GROSS PROFIT] 8368000 [in dollars] 10.5 (8.2 +2.3] 3.412 [2.952 +0.46] 7.088 (SALES - GROSS PROFIT] 7088000 [in dollars] 137 138 139 140 141 142 143 H Rea STOCK DIV NAV HEDGE FUND ME EV PE EPS DIV ABNORMAL deberk MARGIN MONEY marginal tax PB ROPI APV ROSS HIGH LOW TARGET PRICE ferences 1 -_ 0 price quote EVA MVAI BO 130% 9 * * 90 . B ENG 30-11-2019

PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) View Add-Ins File Home Insert Page Layout Formulas Data Review - 2x % Cut Σ AutoSum : A = = = V Wrap Text General E = 5 st Fat Merge Center $ % , .0 .00 Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear Sort & Find & Filter Select Editing Alignment Number Cells TGTH TL TK TM TN Calibri 11 A A E Copy Paste Format Painter BI U. 3 A Clipboard Font TL151 TD TE 140 141 Incremental earnings forecast 142 sales of mini mochi munch 143 other sales 144 cost of goods sold 145 gross profit 146 SG&A Expesnes 147 depreciation 148 EBIT. 149 income tax at 35% 150 Incremental earnings year 1 10200000 2300000 8368000 4132000 4500000 year 2 8200000 [coverted in dollars] 2300000 [coverted in dollars] 7088000 <----- see notes 3412000 -368000 -128800 -239200 3412000 1194200 2217800 151 answers -239200 2217800 152 153 154 155 156 157 K 158 M Rea STOCK DIV NAV HEDGE FUND ME EV PE EPS DIV ABNORMAL deberk MARGIN MONEY marginal tax PB ROPI APV ROSS HIGH LOW TARGET PRICE ferences +) price quote EVA MVAJ | THE I7 130% 0 4 4 all B + 6 7 ENG 30-11-2017 1 8 k