The Food division of Garcia Company reports the following for the current year.

Garcia wants to achieve at least a 10% profit margin next year. Two alternative strategies are proposed.
Strategy 1: Increase advertising expenses by $225,000. The company expects this to increase sales by $600,000.
Strategy 2: Develop a more efficient manufacturing process. This will decrease cost of goods sold by $140,000.
a. For each strategy, compute the profit margin expected for next year.
b. Which strategy should Garcia choose based on expected profit margin?

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Sales .... $4,000,000 Cost of goods sold 2,800,000 Gross profit ... 1,200,000 Expenses... 1,000,000 Income.... $ 200,000