Question 4 (8 minutes, 8 marks) The Leather division of a Garnett Co. has two product lines: garments and shoes. The financial results for the product lines are as follows: Product lines Garments Shoes 500,000 700,000 325,000 280,000 175,000 420,000 Sales Variable expenses Contribution Margin Less Directly Traceable Fixed Expenses Advertising Administration Depreciation Total Traceable Fixed expenses Product line Margins 80,000 112,000 30,000 35,000 25,000 56,000 135,000 203,000 $ 40,000 $ 217,000 Common fixed costs total $125,000. The sales manager wants to run a special promotion campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the garment product line by $200,000 or sales of the shoes product line by $145,000. The promotion campaign would cost $50,000 for either product line. Required: Using incremental analysis, should the company spend the additional $50,000 on advertising and, if so, on which product line? Be sure to indicate by how much profits will increase or decrease for each product. Clearly show how you arrived at your answer. Hint: Think incrementally. Which costs and revenues will change and which ones will not