Operating profit firm can expect to earn from ad campaign

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Reference no: EM131177491

Bangers, Inc. is a start-up manufacturer of australian style frozen veggie pies located in San Antonio, Texas. The company is five years old and recently installed the manufacturing capabity to quadruple its unit sales. To jump start the demand for its products, the company founders have hired a local advertising firm to create a series of ads for a new line of meat pies. The ads will cost the first $350,000 to run for one year. Bangers' management hopes that the advertising will produce annual sales of 2.2 million for its meat pies. Moreover, the firm's management expects that sales of its veggies pies wil increase by $100,000 next year as a reslt of the company's name recognition dericed from the ad campaign. If Banger's operating profits per dollar of new sales revenues are 50 percent and the firm faces a 33 percent tax bracket, what is the incremental operating profit the firm can expect to earn from the ad campaign?

The incremental operating profit the firm can expect to earn from the ad campaign in year 1 is ?

The incremental operating profit the firm can expect to earn from the ad campaign in year 2 is?

Reference no: EM131177491

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