Question: Bangers Inc is a start up manufacturer of Australian style frozen veggie
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 $400,000 to run for one year. Boomerang's management hopes that the advertising will produce annual sales of $2 million for its meat pies. Moreover, the firm's management expects that sales of its veggie pies will increase by $200,000 next year as a result of the company name recognition derived from the meat pie ad campaign. If Boomerang's operating profits per dollar of new sales revenue are 40 percent and the firm faces a 30 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?
Answer to relevant QuestionsApple's (AAPL) iPad jump started the touchscreen computer market to levels few analysts had ever dreamed possible. Moreover, the popularity of the iPad pushed Apple's competitors to offer similar touchscreen computers. ...Duncan Motors is introducing a new product that it expects will increase its net operating income by $300,000. Duncan Motors has a 34 percent marginal tax rate. This project will also produce $50,000 of depreciation per ...The Guo Chemical Corporation is considering the purchase of a chemical analysis machine. The purchase of this machine will result in an increase in earnings before interest and taxes of $70,000 per year. The machine has a ...The Shome Corporation, a firm in the 34 percent marginal tax bracket with a 15 percent required rate of return or discount rate, is considering a new project. This project involves the introduction of a new product. This ...The owner of the Crusik Distribution Company is evaluating the expected annual sales for a new line of facial care products and estimates that there is a 50 percent chance that the product line will be extremely successful, ...
Post your question