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The Food division of Garcia Company reports the following for the current year. Sales $ 4 , 0 0 0 , 0 0 0 Cost

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% profit 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.
For each strategy, compute the profit margin expected for next year.
Which strategy should Garcia choose based on expected profit margin?

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