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 fromoperations.

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Profit Centers Drexel-Hall Store 1 Store 2 Store 3 Dollars % Dollars Dollars % Dollars % Sales. Variable costs. ···· Contribution margin . Traceable fixed costs: controllable.. Performance margin $288,000 Traceable fixed costs: committed Store responsibility margin S 108,000 Common fixed costs Income from operations $ 72,000 1,080,000 60 $720,000 40% $228,000 38% $222,000 37% $270,000 45% 372,000 62 378,000 63 330,000 55 432,000 24 120,000 20 102,000 17 $120,000 210,000 35 16% $108,000 48,000 6% $60,000 18% 20% $60,000 66,000 (6,000) 10% 11 (1)% 180,000 10 66,000 1 10% $54,000 9% $ 36,000 2 4%