3) instruction

required

Differential Amalysis for Sales Promotion Proposal Ralsa Cosmetics Company is planning a one-month campaign for March to promote sales of one of its two cosmetics products. A total of $200,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 75 , ooo additional units of moisturizer or 60,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product. 1. Prepare a differential analysis as of February 17 to determine whether to promote moisturizer (Alternative 1) or perfume (Alternative 2). If an amount is zero, enter "O". If required, use a minus sign to indicate a loss. Differential Analysis 2. Determine whether to promote moisturizer (Alternative 1) or perfume (Alternative 2). 3. The sales manager had tentatively decided to promote moisturizer estimating that oparating income would be increased by $250,000 (\$6 operating income per unit times 75,000 units for a total of 5450,000 . less promotion expenses of $200,000). The manager also believed that the selection of perfume would reduce operating income by $20,000 ( $3 operating income per unit times 60,000 units for a total of $180,000. less promotion expenses of $200,000). State briefly your reasons for supporting or opposing the tentative decision. The sales manager's tentative decision should be The sales manager considered the full unit costs instead of the differential (additional) revenue and differential (additional) costs. An analysis similar to that presented in part (1) would lead to the selection of for the promotional campaign because this alternative will contribute to operating income than would be contributed by promoting