Question
Neil Company would like to initiate an advertising campaign on one of the two products (X or Y) during the next month. The campaign would
Neil Company would like to initiate an advertising campaign on one of the two products (X or Y) during the next month. The campaign would cost $15,000. Marketing studies indicate that such a campaign would increase sales of product X by $75,000 or increase sales of product Y by 100,000. X has a contribution margin ratio of 60% and Ys is 40%. X has also a Product segment margin ratio of 45% and Y has 35%.
a. Given this information, how much does each product X and Y result for increasing net income of Neil Company? Show the numbers for both X and Y separately Product X Product Y
b. Which product would you recommend that Neils company focus its advertising campaign, product X or Y? Show computations to support your answer. Based on this information, increased net income for Neil Company from the best profitable product, name the Product as X or Y would be:
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