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A company deals in two types of products A and B. The accounting department has prepared a detailed profit and loss statement as follows Items

A company deals in two types of products A and B. The accounting department has prepared a detailed profit and loss statement as follows

Items

The company

product A

product B

Revenue

600,000

100%

400,000

100%

200,000

100%

Variable cost

360,000

60%

260,000

65%

100,000

50%

Contribution margin

240,000

40%

140,000

35%

100,000

50%

Direct cost

72,000

12%

20,000

5%

52,000

26%

Interest

168,000

28%

120,000

30%

48,000

24%

General fixed cost

18,000

3%

Net income

150,000

25%

The company plans to run an advertising service campaign for either product in the near future. Expected interruption cost 8,000,000. Marketing research shows that campaign ads will increase product A sales by 70,000,000 or increase product B sales by 60,000,000.

In your opinion, which product should the company advertise for?

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