What is the incremental operating profit the firm

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(Incremental earnings from advertising? synergies) ?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 capacity 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 its new line of meat pies. The ads will cost the firm ?$300 comma 000300,000 to run for one year. ? Bangers' management hopes that the advertising will produce annual sales of ?$2.12.1 million for its meat pies. ? Moreover, the? firm's management expects that sales of its veggie pies will increase by ?$300 comma 000300,000 next year as a result of the company name recognition derived from the meat pie ad campaign. If? Bangers' operating profits per dollar of new sales revenue are 4040 percent and the firm faces a 3131 percent tax? bracket, what is the incremental operating profit the firm can expect to earn from the ad? campaign? Does the decision to place the ad look good from the perspective of the anticipated? profits?

Reference no: EM131579420

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