Differential Analysis for Sales Promotion Proposal Parisian Cosmetics Company is planning a one-month campaign for September to promote sales of one of its two cosmetics products. A total of $98,000 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: Moisturizer Perfume Unit selling price $53 $58 Unit production costs: 59 $12 Direct materials Direct labor 3 4 Variable factory overhead 2 3 6 7 Fixed factory overhead Total unit production costs Unit variable selling expenses $20 $26 17 16 Unit foced selling expenses 9 Total unit costs $46 $49 Operating income per unit 57 59 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 20,000 additional units of moisturizer or 17,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product. Required: 1a. Prepare a differential analysis as of August 21. If an amount is zero, enter "O". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Promote Moisturizer (Alt. 1) or Promote Perfume (Alt. 2) August 21 Promote Promote Differential Moisturizer Perfume Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: ou Direct materials Direct labor Variable factory overhead Variable selling expenses Sales promotion Profit (loss) 1b. Determine whether to promote moisturizer (Alternative 1) or promote perfume (Alternative 2). 2. The sales manager had tentatively decided promote perfume, estimating that operating income would be increased by $55,000 ($9 operating income per unit for 17,000 units, less promotion expenses of $98,000). The manager also believed that the selection of moisturizer would reduce operating income by $42,000 ($7 operating income per unit for 20,000 units, less promotion expenses of 598,000). 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