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Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to
Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Minneapolis $315,000 100% 189,000 60% 126,000 40% 34,650 11% 91,350 29% 15,750 5% $ 75,600 24 % Market Medical $210,000 100% 134,400) 64% 75,600 36% 12,600 Dental $ 105,000 100% 54,600 52% 50,400 48% 22,050 21% 6% $ 28,350 27% $ 63,000 30% 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 $5,250. Marketing studies indicate that such a campaign would increase sales in the Medical market by $42.000 or increase sales in the Dental market by $36,750. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign
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