Parisian Cosmetics Company is planning a one-month campaign for September to promote sales of one of its two cosmetics products. A total of $97,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign:

		Moisturizer			Perfume
Unit selling price			$50			$55
Unit production costs:
	Direct materials		$9			$12
	Direct labor		3			4
	Variable factory overhead		2			3
	Fixed factory overhead		5			6
	Total unit production costs		$19			$25
Unit variable selling expenses			16			15
Unit fixed selling expenses			9			6
	Total unit costs		$44			$46
Operating income per unit			$6			$9

No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 23,000 additional units of moisturizer or 19,000 additional units of perfume could be sold from the campaign without changing the unit selling price of either product.

Required:

1a. Prepare a differential analysis as of August 21. If an amount is zero, enter "0".

Differential Analysis
Promote Moisturizer (Alt. 1) or Promote Perfume (Alt. 2)
August 21
	Promote Moisturizer (Alternative 1)	Promote Perfume (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank 302c14fba041fe4_1	$fill in the blank 302c14fba041fe4_2	$fill in the blank 302c14fba041fe4_3
Costs:
Direct materials	fill in the blank 302c14fba041fe4_4	fill in the blank 302c14fba041fe4_5	fill in the blank 302c14fba041fe4_6
Direct labor	fill in the blank 302c14fba041fe4_7	fill in the blank 302c14fba041fe4_8	fill in the blank 302c14fba041fe4_9
Variable factory overhead	fill in the blank 302c14fba041fe4_10	fill in the blank 302c14fba041fe4_11	fill in the blank 302c14fba041fe4_12
Variable selling expenses	fill in the blank 302c14fba041fe4_13	fill in the blank 302c14fba041fe4_14	fill in the blank 302c14fba041fe4_15
Sales promotion	fill in the blank 302c14fba041fe4_16	fill in the blank 302c14fba041fe4_17	fill in the blank 302c14fba041fe4_18
Income (Loss)	$fill in the blank 302c14fba041fe4_19	$fill in the blank 302c14fba041fe4_20	$fill in the blank 302c14fba041fe4_21

1b. Determine whether to promote moisturizer (Alternative 1) or perfume (Alternative 2).

2. The sales manager had tentatively decided to promote perfume, estimating that operating income would be increased by $74,000 ($9 operating income per unit for 19,000 units, less promotion expenses of $97,000). The manager also believed that the selection of moisturizer would increase operating income by $41,000 ($6 operating income per unit for 23,000 units, less promotion expenses of $97,000). State briefly your reasons for supporting or opposing the tentative decision.

The sales manager's tentative decision should be . The sales manager considered the full unit costs instead of the differential (additional) revenue and differential (additional) costs. An analysis similar to that presented in part (1) would lead to the selection of for the promotional campaign, because this alternative will contribute to operating income than would be contributed by promoting .