Question
Jen and Barrys ice cream shop charges $1.5 for a cone. Variable expenses are $0.3 per cone, and fixed costs total $2,300 per month. A
Jen and Barrys ice cream shop charges $1.5 for a cone. Variable expenses are $0.3 per cone, and fixed costs total $2,300 per month. A Valentines Day 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 $155. Required: Calculate the effect of the promotion on operating income for the second week of February. Do you think the promotion should occur?
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