Fun Treat Fun Treats Inc. sell a variety of drink and food products including juice and ice cream. The segmented income statements for these two products are as follows:

The company's management is considering a special advertising campaign that will run on a Saturday morning when many children are watching television. The advertising campaign is expected to cost $25,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the juice division by $100,000 or increase sales of the ice cream division by $100,000. The marketing supervisor has decided that since both products have the same segment margin, the company will be equally as well off regardless of which product is featured. Required:

A. Do you agree or disagree with the marketing supervisor? Why or why not.

B. Which product do you feel should be featured? Show calculations to support your answer.

Ice Cream Juice $500,000 Sales $600,000 Variable expenses Contribution margin Traceable fixed expense 200,000 300,000 300,000 300,000 100,000 $200,000 100,000 $200,000 Segment margin