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The Food division of Garcia Company reports the following for the current year. Sales $ 4,000,000 Cost of goods sold 2,800,000 Gross profit 1,200,000 Expenses
The Food division of Garcia Company reports the following for the current year. Sales $ 4,000,000 Cost of goods sold 2,800,000 Gross profit 1,200,000 Expenses 1, 000 ,000 Income $ 200,000 Garcia wants to achieve at least a 10% prot margin next year. Two alternative strategies are proposed. Strategy 1: Increase advertising expenses by $225,000. The company expects this to increase sales by $600,000. Cost of goods sold will not change. Strategy 2: Develop a more efficient manufacturing process. This will decrease cost of goods sold by $140,000. a. For each strategy, compute the profit margin expected for next year. b. Which strategy should Garcia choose based on expected profit margin? 6 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 For each strategy, compute the prot margin expected for next year. (Round your answers to one decimal place.) Strategy 1 Strategy 2
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