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Sarah James runs a bakery and considers a special discount on cupcakes for a month. The price would drop from $1.80 to $1.40. Promotion costs

Sarah James runs a bakery and considers a special discount on cupcakes for a month. The price would drop from $1.80 to $1.40. Promotion costs amount to $3000. Sarah forecasts cupcake sales to rise by 25%, but expects a 10% decline in cookie sales and a 5% increase in bread sales. The current weekly data are as follows:

  • Cupcakes: Sales Price: $1.80, Variable Costs: $0.90, Sales Volume: 7000
  • Cookies: Sales Price: $1.00, Variable Costs: $0.50, Sales Volume: 6000
  • Bread: Sales Price: $2.50, Variable Costs: $1.25, Sales Volume: 4000

Requirement: Calculate the financial impact and advise if Sarah should proceed.

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