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Kokomocht is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch Kokomochi plans to spend $5.2 million on
Kokomocht is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch Kokomochi plans to spend $5.2 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 $9.7 milion this year and $7.7 milion next year. In addition the company expects that now 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 $1.6 million each year Kokomochi's gross profit margin for the Mini Mochi Munch is 31%, and its gross profit margin averagos 22% 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 Salos ol Mini Mochi Munch $ Other Sales $ Cost of Goods Sold Gross Profit S $ Selling, General, and Admin Expenses Depreciation EBIT $ Income tax at 35% $ $ Unlevered Not Income $ s S S S $ 0 $ $ S
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