If an excel document could be used that would be helpful because i don\'t know w
ID: 2779650 • Letter: I
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If an excel document could be used that would be helpful because i don't know where to even begin finding the missing values.
4 6 7 Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi 8 Munch. Kokomochi plans to spend $4.2 million on TV, radio, and print advertising this year for the campaign. 9 The ads are expected to boost sales of the Mini Mochi Munch by $7.8 million this year and $5.8 million next 10 year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely 11 to try Kokomochi's other products. As a result, sales of other products are expected to rise by $2.5 million each 12 13 Kokomochi's gross profit margin for the Mini Mochi Munch is 35%, and its gross profit margin averages 24% for 14 all other products. The company's marginal corporate tax rate is 35% both this year and next year, what are the 15 16 17 18 Incremental earning forecast 19 Sales of mini mochi munch 20 other sales 21 COGS 22 Gross Profit year. incremental earnings associated with the advertising campaign? Round to the nearest dollar YEAR 1 YEAR 2 7,800,000 2,500,000 7,800,000 2,500,000 Selling, general, 8 admin (4,200,000) 23 expenses 24 depreciation 25 EBIT 26 Income tax at 35% 27 unievered net income 28 29Explanation / Answer
Incremental Earnings Forecast
Year 1 Year 2
Sales $7,800,000 $5,800,000
Other Sales $2,500,000 $2,500,000
COGS $6,970,000 $5,670,000 [0.65x7,800,000 + 0.76x2,500,000=6,970,000]
Gross Profit $3,330,000 $2,630,000
SGA $4,200,000 $0
Depriciation $0 $0
EBIT $-870,000 $2,630,000
Income Tax $0 $ 920,500 [0.35x2,630,000 =920,500]
Unlever Net Income $-870,000 $1,709,500
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