The company would like to initiate an intensive advertising

Reference no: EM13589705

Marple Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Houston and one in Dallas. The firm classifies the direct costs of consulting jobs as variable costs.

Assume that Dallas' sales by major market are as follows:

					Market
	Dallas				Construction Clients				Landscaping Clients
Sales	$	600,000	100	%	$	400,000	100	%	$	200,000	100	%
Variable expenses		360,000	60			260,000	65			100,000	50

Contribution margin		240,000	40			140,000	35			100,000	50
Traceable fixed expenses		72,000	12			20,000	5			52,000	26

Market segment margin		168,000	28		$	120,000	30	%	$	48,000	24	%

Common fixed expenses not traceable to markets		18,000	3

Office segment margin	$	150,000	25	%

The company would like to initiate an intensive advertising campaign in one of the two markets during the next month. The campaign would cost $8,000. Marketing studies indicate that such a campaign would increase sales in the construction market by $70,000 or increase sales in the landscaping market by $60,000.

Required:

1a.	Calculate the increased segment margin. (Omit the "$" sign in your response.)

Construction

Clients

Landscaping

Clients

Increased segment margin

Reference no: EM13589705

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