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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 $39 million on
Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch Kokomochi plans to spend $39 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 $9.4 million this year and $74 milion next year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomoch's other products. As a result, sales of other products are expected to rise by $2.5 million each year Kokomochts gross profit margin for the Mini Mochi Munch is 34%, and its gross profit margin averages 25% 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? Incremental Earnings Forecast Year 1 Year 2 Sales of Mini Mochi Munch $ Other Sales 5 5 Cost of Goods Sold $ $ Gross Prot $ s Seling. General and Admin Expenses $ $ Depreciation 0 EBIT 5 $ Income taxa Unlevered Net income
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