Incremental Earnings Forecast Sales of Mini Mochi Munch Other Sales Cost of Goods Sold Gross Profit Selling, General, and Admin. Expenses $ $ EA $ 69 $ EA Year 1 $ $ $ EA 69 SA Year 2

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Incremental Earnings Forecast
Sales of Mini Mochi Munch
Other Sales
Cost of Goods Sold
Gross Profit
Selling, General, and Admin. Expenses
Depreciation
EBIT
Income tax at 35%
Unlevered Net Income
55
59
$
S
$
69
$
$
69
69
Year 1
0
$
$
59
$
59
EA
69
69
Year 2
0
Transcribed Image Text:Incremental Earnings Forecast Sales of Mini Mochi Munch Other Sales Cost of Goods Sold Gross Profit Selling, General, and Admin. Expenses Depreciation EBIT Income tax at 35% Unlevered Net Income 55 59 $ S $ 69 $ $ 69 69 Year 1 0 $ $ 59 $ 59 EA 69 69 Year 2 0
Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch.
Kokomochi plans to spend $5.4 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 $8.1 million this year and $6.1 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 $1.7 million each year.
Kokomochi's gross profit margin for the Mini Mochi Munch is 39%, and its gross profit margin averages 24% 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?
CESSOR
Complete the table below: (Round to the nearest dollar)
Incremental Eamings Forecast
Year 2
Sales of Mini Mochi Munch
Other Sales
Cost of Goods Sold
LA LA S
$
$
Year 1
S
S
10
S
Transcribed Image Text:Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $5.4 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 $8.1 million this year and $6.1 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 $1.7 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 39%, and its gross profit margin averages 24% 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? CESSOR Complete the table below: (Round to the nearest dollar) Incremental Eamings Forecast Year 2 Sales of Mini Mochi Munch Other Sales Cost of Goods Sold LA LA S $ $ Year 1 S S 10 S
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