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Jen and Barry's ice cream shop charges $2.20 for a cone. Variable expenses are $0.66 per cone, and fixed costs total $2,600 per month.
Jen and Barry's ice cream shop charges $2.20 for a cone. Variable expenses are $0.66 per cone, and fixed costs total $2,600 per month. A Valentine's 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 600 additional cones would be sold and that 800 cones would be given away. Advertising costs for the promotion would be $220. Required: a. Calculate the effect of the promotion on operating income for the second week of February. b. Do you think the promotion should occur?
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