18.10

equal $450,000 per year. Revenue last year was $10,000,000 (premiums). The percentage of policies of various lengths is as follows: Experience has shown that if a policy remains in effect for more than two years, it is rarely cancelled. Total premiums would remain constant at $10,000,000, and there are no other changes in fixed or variable cost behavior. expenses would rise by $1,200,000, and advertising (including direct mail solicitation) would increase by $1,000,000. 2. What impact would Plan 1 have on income? segment income by $ 3. What impact would Plan 2 have on income? segment income by ? equal $450,000 per year. Revenue last year was $10,000,000 (premiums). The percentage of policies of various lengths is as follows: Experience has shown that if a policy remains in effect for more than two years, it is rarely cancelled. Total premiums would remain constant at $10,000,000, and there are no other changes in fixed or variable cost behavior. expenses would rise by $1,200,000, and advertising (including direct mail solicitation) would increase by $1,000,000. 2. What impact would Plan 1 have on income? segment income by $ 3. What impact would Plan 2 have on income? segment income by