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What are incremental earnings associated with advertising

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Reference no: EM132962813

Kokomochi is considering the launch of an advertising campaign for its latest dessert? product, the Mini Mochi Munch. Kokomochi plans to spend $4.8 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 $8.4 million this year and $6.4 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 $1.9 million each year.

Problem 1: ?Kokomochi's gross profit margin for the Mini Mochi Munch is 38%?, and its gross profit margin averages 20% for all other products. The? company's marginal corporate tax rate is 21% both this year and next year. What are the incremental earnings associated with the advertising? campaign?

Reference no: EM132962813

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