solution
solution.
Kokomochi is considering the launch of an advertising campaign for its latest dessert? product, the Mini Mochi Munch. Kokomochi plans to spend $3.75 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 $11.36 million this year and $9.36 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 $3.89 million each year. Kokomochi’s gross profit margin for the Mini Mochi Munch is 34%?, and its gross profit margin averages 25% for all other products. The? company’s marginal corporate tax rate is 33% both this year and next year. What are the incremental earnings associated with the advertising?campaign?
Note?: Assume that the company has adequate positive income to take advantage of the tax benefits provided by any net losses associated with this campaign.
Calculate the incremental earnings for year 1? below: ?(Round to three decimal? places.)
Year 1
Incremental Earnings Forecast ($ million)
Sales of Mini Mochi Munch
$
Other Sales
$
Cost of Goods Sold
$
Gross Profit
$
Selling, General, and Administrative
$
Depreciation
$
EBIT
$
Income Tax at 33%
$
Incremental Earnings
$
Calculate the incremental earnings for year 2? below: ? (Round to three decimal? places.)
Year 2
Incremental Earnings Forecast ($ million)
Sales of Mini Mochi Munch
$______
Other Sales
$_______
Cost of Goods Sold
$______
Gross Profit
$_____
Selling, General, and Administrative
$_____
Depreciation
$______
EBIT
$______
Income Tax at 33%
$_____
Incremental Earnings
$_______
Note?: Assume that the company has adequate positive income to take advantage of the tax benefits provided by any net losses associated with this campaign.
Calculate the incremental earnings for year 1? below: ?(Round to three decimal? places.)
Year 1
Incremental Earnings Forecast ($ million)
Sales of Mini Mochi Munch
$
Other Sales
$
Cost of Goods Sold
$
Gross Profit
$
Selling, General, and Administrative
$
Depreciation
$
EBIT
$
Income Tax at 33%
$
Incremental Earnings
$
Calculate the incremental earnings for year 2? below: ? (Round to three decimal? places.)
Year 2
Incremental Earnings Forecast ($ million)
Sales of Mini Mochi Munch
$______
Other Sales
$_______
Cost of Goods Sold
$______
Gross Profit
$_____
Selling, General, and Administrative
$_____
Depreciation
$______
EBIT
$______
Income Tax at 33%
$_____
Incremental Earnings
$_______
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines
Order Paper Now