Shown as follows is a segmented income statement for Drexel-Hall during the current month.

Profit Centers

Drexel-HallStore 1Store 2Store 3Dollars%Dollars%Dollars%Dollars%Sales$1,800,000100%$600,000100%$600,000100%$600,000100%Variable costs1,080,00060372,00062378,00063330,00055Contribution margin$720,00040%$228,00038%$222,00037%$270,00045%Traceable fixed costs: controllable432,00024120,00020102,00017210,00035Performance margin$288,00016%$108,00018%$120,00020%$60,00010%Traceable fixed costs: committed180,0001048,000866,0001166,00011Store responsibility margin$108,0006%$60,00010%$54,0009%$(6,000)(1)%Common fixed costs36,0002Income from operations$72,0004%

All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores.

The marketing manager of Drexel-Hall is considering two alternative advertising strategies, each of which would cost $15,000 per month. One strategy is to advertise the name Drexel-Hall, which is expected to increase the monthly sales at all stores by 5 percent. The other strategy is to emphasize the low prices available at Store 2, which is expected to increase monthly sales at Store 2 by $150,000, but to reduce sales by $30,000 per month at Stores 1 and 3.

Determine the expected effect of each strategy on the company's overall income from operations.

Shown as follows is a segmented income statement for Drexel-Hall during the current month.

Profit Centers

Drexel-HallStore 1Store 2Store 3Dollars%Dollars%Dollars%Dollars%Sales$1,800,000100%$600,000100%$600,000100%$600,000100%Variable costs1,080,00060372,00062378,00063330,00055Contribution margin$720,00040%$228,00038%$222,00037%$270,00045%Traceable fixed costs: controllable432,00024120,00020102,00017210,00035Performance margin$288,00016%$108,00018%$120,00020%$60,00010%Traceable fixed costs: committed180,0001048,000866,0001166,00011Store responsibility margin$108,0006%$60,00010%$54,0009%$(6,000)(1)%Common fixed costs36,0002Income from operations$72,0004%

All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores.

The marketing manager of Drexel-Hall is considering two alternative advertising strategies, each of which would cost $15,000 per month. One strategy is to advertise the name Drexel-Hall, which is expected to increase the monthly sales at all stores by 5 percent. The other strategy is to emphasize the low prices available at Store 2, which is expected to increase monthly sales at Store 2 by $150,000, but to reduce sales by $30,000 per month at Stores 1 and 3.

Determine the expected effect of each strategy on the company's overall income from operations.