Exercise 12-17 (Algo) Special promotion-effects of a two-for-one sale LO 8, 9 Pam and Lenny's ice...
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Exercise 12-17 (Algo) Special promotion-effects of a two-for-one sale LO 8, 9 Pam and Lenny's ice cream shop charges $1.45 for a cone. Variable expenses are $0.33 per cone, and fixed costs total $2,300 per month. A "sweetheart" promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 725 additional cones would be sold and that 925 cones would be given away. Advertising costs for the promotion would be $135. Required: a. Calculate the effect of the promotion on operating income for the second week of February. (Do not round intermediate calculation and round your final answer to 2 decimal places.) Net in operating income b. Do you think the promotion should occur? Yes No Exercise 12-17 (Algo) Special promotion-effects of a two-for-one sale LO 8, 9 Pam and Lenny's ice cream shop charges $1.45 for a cone. Variable expenses are $0.33 per cone, and fixed costs total $2,300 per month. A "sweetheart" promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 725 additional cones would be sold and that 925 cones would be given away. Advertising costs for the promotion would be $135. Required: a. Calculate the effect of the promotion on operating income for the second week of February. (Do not round intermediate calculation and round your final answer to 2 decimal places.) Net in operating income b. Do you think the promotion should occur? Yes No
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