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Bangers, Inc. is a start-up manufacturer of Australian-style frozen veggie pies located in San Antonio, Texas. the company is five years old and recently installed
Bangers, Inc. is a start-up manufacturer of Australian-style frozen veggie pies located in San Antonio, Texas. the company is five years old and recently installed the manufacturing capacity to quadruple its unit sales. To jump start the demand for its products, the company founders have hired a local advertising firm to create a series of ads for its new line of meat pies. the ads wiH cost the firm dollar 500,000 to run for one year. Bangers' management hopes that the advertising wiH produce annual sales of dollar 2 million for its meat pies. Moreover, the firm's management expects that sales of its veggie pies will increase by dollar 100,000 next year as a result of the company name recognition derived from the meat pie ad campaign. If Bangers' operating profits per dollar of new sales revenue are 60 percent and the firm faces a 33 percent tax bracket, what is the incremental operating profit the firm can expect to earn from the ad campaign? Does the decision to place the ad look good from the perspective of the anticipated profits
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