# Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini...

###### Question:

Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $4.8 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$8.5 million this year and $6.5 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$2.4 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 32 % , and its gross profit margin averages 20 % for all other products. The company's marginal corporate tax rate is 35 % both this year and next year. What are the incremental eamings associated with the advertising campaign? Complete the table below: (Round to the nearest dollar) Incremental Earnings Forecast Year 1 Sales of Mini Mochi Munch $Other Sales S Cost of Goods Sold Gross Profit$ Selling, General, and Admin. Expenses 0 Depreciation EBIT S S Income tax at 35 % Unlevered Net Income

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