Refer to the data in Exercise 11€“3. Assume that Vancouver€™s sales by major market are as follows:

In Exercise

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:
1. In which of the markets would you recommend that the company focus its advertising campaign? Show computations to support your answer.
2. In Exercise 11€“3, Vancouver shows $90,000 in traceable fixed expenses. What happened to the $90,000 in this exercise?

Transcribed Image Text:

Office Total Company Toronto Vancouver Sales... Variable expenses.. Contribution margin.. Traceable fixed expenses... Office segment margin.... Common fixed expenses not traceable to offices... Operating income.... 1000% 100% $150,000 30 100% $750,000 $600,000 540 60 105,000 52 46.0 345,000 168,000 224 177,000 70 40 90,000 240,000 15 $ 27000 S 150,000 25% 236 18% 160 120,000 $ 57,000 7.6%