Question

Koker ech se side nghe la radio, and print adverdising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $9.5 million this year and $7.6 milion next year inaddtion, te company expects that new sumers who try mo Mr. Moti Munch will be moe ikely to try Kokomoonrs other proacts. As a result, saes oforer chor an ad ta ng pay f its latest deset pr det the Mr. Mchiwch Khor di plans to spend Iamilion on TV 名te w e, 产品 以 products are expected to rise by $1.7 million each year Kokor chi's gros polt arg for the Min Mor Ma h is 31%, and its gess profit mar n averages 25% for all other products. The o mpany's margnal corporate tax rate s 35% both this year and next year what are the nrenertal eamngs assocated with the advessing dmpagn? Complete the lable below (Round to the nearest dolar) 企up

Answer 1

Particulars	Year 1	Year 2
Sales of Mini Mochi Munch	9,600,000	7,600,000
Add: Sales of other products	1,700,000	1,700,000
Less: Cost of goods sold (balancing figure)	7,899,000	3,119,000
Gross Profit (Sales x Gross margin)	9,600,000 x 31% + 1,700,000 x 25% = 3,401,000	7,600,000 x 31% + 1,700,000 x 25% = 2,781,000
Less: Advertising expense	4,300,000	0
Profit before taxes	(-)899,000	2,781,000
Less: taxes@35%	(-)314,650	973,350
Incremental earnings after tax	(-)584,350	1,807,650