Matt Ledesma has recently been hired as vice president for marketing by Glencoe, Inc. Matt is convinced that Glencoe should launch a major new promotion that includes a tie-in with a movie. For every one of Glencoe's products sold, the customer would be given two free tickets to the movie. Glencoe's most recent income statement, based on sales of 100,000 units, is as follows:

Matt has conducted some market research and concluded that the promotion would increase sales by 15,000 units. The movie tickets would cost Glencoe \(\$ 0.50\) each. What would net income be if Glencoe does the promotion? What would net income be if one ticket instead of two is given away with each purchase?

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Sales revenue Less variable costs Contribution margin Less fixed costs Net income $300,000 120,000 $180,000 70,000 $110,000