Question

Kokomochi is considering the launch of an advertising campaign for its latest dessert​ product, the Mini Mochi Munch. Kokomochi plans to spend $ 5.1 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 $ 8.6 million this year and $ 6.6 million next year. In​ addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try​ Kokomochi's other products. As a​ result, sales of other products are expected to rise by $ 2.4 million each year. ​Kokomochi's gross profit margin for the Mini Mochi Munch is 33 %​, and its gross profit margin averages 23 % 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 Year 1 Sales of Mini Mochi Munch $ Other Sales $ Cost of Goods Sold $ Gross Profit $ Selling, General, and Admin. Expenses $ Depreciation 0 EBIT $ Income tax at 35% $ Unlevered Net Income $

Answer 1