EXERCISE 10–14 Working with a Segmented Income Statement [LO1]

Refer to the data in Exercise 10–13. Assume that Minneapolis’ sales by major market are:

The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $40,000 or increase sales in the Dental market by

$35,000.

Required:

1. In which of the markets would you recommend that the company focus its advertising campaign?

Show computations to support your answer.

2. In Exercise 10–13, Minneapolis shows $48,000 in traceable fixed expenses. What happened to the

$48,000 in this exercise?