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Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch Kokomochi plans to spend $5.00 million on

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Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch Kokomochi plans to spend $5.00 million on TV, radio and print advertising this year for the campaign The ads are expected to boost sales of the Mini Mochi Munch by $9 00 million this year and $7.00 million next year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomochi's other products. As a result , sales of other products are expected to rise by $2.00 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 35%, and its gross profit margin averages 25% for all other products. The company's marginal corporate tax rate is 35% both this year and next year. What are the incremental earnings associated with the advertising campaign? Note: Assume that the company has adequate positive income to take advantage of the tax benefits provided by any net losses associated with this campaign Incremental Earnings Forecast ($ million) Sales of Mini Mochi Munch $ Other Sales $ Cost of Goods Sold $ Gross Profit $ $ Selling, General, and Administrative Depreciation $ EBIT $ $ Income Tax at 35% $ Incremental Earnings

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