Discuss the below in detail:
Q: Among the products sold by The Corner Store is a line of gizmos, consisting of three models. Data for a typical period are shown in the spreadsheet. The sales manager has proposed an advertising campaign costing $15,000, which is expected to result in a one-time 10% increase in unit sales, with no change in sales mix.
A. Would the advertising campaign be profitable? Explain briefly.
B. Another alternative is for the advertising to emphasize Model C. In that case, it is expected that the increase in unit sales would be: A, 10; B, 10; C 40. Would this yield a better result? Explain.
| Corner Store, selected sales data |
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Selling price |
Cost |
Units sold |
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Model A |
$400 |
$250 |
550 |
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Model B |
$675 |
$300 |
300 |
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Model C |
$950 |
$450 |
150 |