In scenario 1, assume that COGS is 75% of sales (which means your profit margin will be 25% on every widget you sell). The first scenario assumes that no change occurs, either in reduction in costs, or, in sales revenues. We'll call this first scenario the "as is" or, "the status quo scenario." Your sales revenue in scenario 1 is $600 million. In scenario 2, you reduce the original COGS from, 75% to 65% (through improvements in purchasing and procurement). You had to spend money (on new software, etc.) to reduce your purchasing costs and so your S&A increased by $2.0 million. Remember that in scenario 2 you don't increase your sales at all---so your sales revenues stay the same (no change from scenario 1), as do your Promotional Expenses (don't change from scenario 1) . . In scenario 3, you increase promotional expenses by15% (from a starting point of $35 million), resulting in a 25% increase in annual sales revenues. S&A costs increase by $5 million. Your purchasing costs do not decrease (i.e., COGS stays the same as it was in scenariol at 75%). Scenario 2 Scenario 1 Scenario 3 $600 million $600 million Annual sales: million s million million COGS: S million $150 million million Gross Profit s million Promotional Expenses S35 million $35 million D. Focus $35 million $35 million Promotional Expenses $ million $5 million $ million Sales/Administration S million $ million million Total profit before taxes: $ million 3 Point Question: Based on the scenarios presented above, what implication can be drawn from the above problem? Type your response below