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Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $3.6 million on

Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $3.6 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $8.4 million this year and $6.4 million next year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomochi's other products. As a result, sales of other products are expected to rise by $1.6 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 34%, and its gross profit margin averages 24% for all other products. The company's marginal corporate tax rate is 35% both this year and next year. What are the incremental earnings associated with the advertising campaign? Complete the table below: (Round to the nearest dollar.) Incremental Earnings Forecast Year 1 Year 2 Sales of Mini Mochi Munch Other Sales $ 8400000 $ 6400000 $ 1600000 $ 1600000 Cost of Goods Sold $ 6760000 $ 5440000 Gross Profit $ 3240000 $ 2560000 Selling, General, and Admin. Expenses $ 3600000 $ 0 Depreciation 0 0 EBIT 360000 $ 2560000 Income tax at 35% $ 126000 $ 896000 Unlevered Net Income 234000 $ 1664000

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