Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $$4\mathrm{.}82$ 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 $$10\mathrm{.}03$ million this year and $$8\mathrm{.}03$ 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 $$2\mathrm{.}41$ million each year.

Kokomochi's gross profit margin for the Mini Mochi Munch is $35\%,$ and its gross profit margin averages $25\%$ for all other products. The company's marginal corporate

tax rate is $33\%$ both this year and next year. What are the incremental earnings associated with the advertising campaign?

Note: Assume that the company has adequate positive income to take advantage of the tax benefits provided by any net losses associated with this campaign.

Ueprec$$at$$on

EBIT

Income Tax at $33\%$

Calculate the incremental earnings for year $2$ below: $($Round to three decimal places.$)$

Year $2$

Incremental Earnings Forecast $($ $ million$)$

Sales of Mini Mochi Munch $

Other Sales $

Cost of Goods Sold

Gross Profit $

Selling, General, and Administrative $

Depreciation

EBIT

Income Tax at $33\%$

Incremental Earnings