(Sales mix) Canine Challet provides two types of services to dog owners, grooming and training. All company personnel can perform each service equally well. To expand sales and market share, Canine Challet’s manager, Brenda Bulldog, relies heavily on radio and billboard advertising, but the 2006 advertising budget is expected to be very limited. Information on pro¬ jected operations for 2006 follows:

a. What is Canine Challet’s projected pre-tax profit or Goss) for 2006?

b. If $1 spent on advertising could increase grooming revenue by $20 or training revenue by $20, on which service should each adveitising dollar be spent?

c. If $1 spent on advertising could increase either grooming billable or training billable time by 1 hour, on which service should each advertis¬ ing dollar be spent?

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Grooming Training Revenue per billable hour Variable cost of labor $30 $50 $8 $18 Material cost per billable hour $4 $6 Allocated fixed cost per year $200,000 $180,000 Projected billable hours for 2006 20,000 16,000