(Sales mix decision) Poodle Pound provides two types of services to dog owners: grooming and training. All company personnel can perform either service equally well. To expand sales and market share, the Poodle Pound’s manager, Golden Retriever, relies heavily on radio and billboard advertising. For 1997, advertising funding is expected to be very limited, Information on projected operations for 1997 follows:

a. What is Poodle Pound’s projected pretax profit or (loss) for 1997?

b. If $1 spent on advertising could increase either Grooming revenue by $20 or Training revenue by $20, on which service should the advertising dollar be spent?

c. If $1 spent on advertising could increase Grooming billable time by 1 hour or Training billable time by 1 hour, on which service should the advertising dollar be spent?LO1

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Revenue per billable hour Variable cost of labor Material cost per billable hour Allocated fixed costs per year Projected billable hours for 1997) GROOMING $ SA 15 TRAINING $ 25 $ 5 $ 10 I 2 $100,000 $ 10,000 $90,000 $ 8,000