Maroni & Sons is a pl|umbing and heating company. A contribution margin format s

Question

Maroni & Sons is a pl|umbing and heating company. A contribution margin format segmented income statement (by division) for the most recent year is given below: To increase sales in the Plumbing division next year. Maroni & Sons is considering starting an intense advertising campaign in that division. This campaign would cost SI5.000 and would be expected to increase sales in the Plumbing division by $120,000. If the company were to adopt the advertising campaign, what would be the impact 7 on the total company's profit? Profit would increase by $105,000 Profit would decrease by $105,000 Profit would increase by $27,000 Profit would decrease by $27,000

Explanation / Answer

C.profits would increase by $27,000

127,000*35%(CM%)-$15,000=$27,000 increased

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