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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 $ 4 .

Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $ 4.5 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 $ 9.5 million this year and $ 7.5 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 $ 1.9 million each year.
Kokomochi's gross profit margin for the Mini Mochi Munch is 36%, and its gross profit margin averages 22% for all other products. The company's marginal corporate tax rate is 30% both this year and next year. What are the incremental earnings associated with the advertising campaign?
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Part 1
Complete the table for year 1 below:(Round to the nearest dollar.)
Incremental earnings forecast
Year 1
Sales of Mini Mochi Munch
$
Other sales
Cost of goods sold
Gross profit
$
Selling, general and admin. expenses
Depreciation
0
EBIT
$
Income tax at 30%
Unlevered net profit
$
Part 2
Complete the table for year 2 below:(Round to the nearest dollar.)
Incremental earnings forecast
Year 2
Sales of Mini Mochi Munch
$
Other sales
Cost of goods sold
Gross profit
$
Selling, general and admin. expenses
Depreciation
0
EBIT
$
Income tax at 30%
Unlevered net profit
$

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