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Company Ltd. has provided the following relating to the most recent month of operations, for their main product, cookies. The company sold 20,000 cookies. Sales

Company Ltd. has provided the following relating to the most recent month of operations, for their main product, cookies. The company sold 20,000 cookies.

Sales

40,000

COGS

16,000

Fixed Selling Costs

2,000

Fixed Administrative Costs

5,000

Variable Selling Costs

10% of sales

Variable Administrative Costs

2,000

The owner thinks that 22,000 cookies could be sold next month if $2,000 were spent on an advertising campaign. Required Should the company proceed with the advertising campaign? Calculate the impact to operating income.

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