ABC Company sells a variety of drink and food products including potato chips and sodas. The segmented income statements for these two products (profit centers) are as follows:

total soda chip

Sales . 1700,000 . 800,000 900,000 .

Variable costs 515000 200,000 315000

Contribution margin 1185000 . 600000 585000

Directly traceable fixed costs 280000 120000 160000

Segment margin 905000 . 480000 . 425000

Allocated common fixed costs 200,000 . 100,000 . 100,000

Net income 705000 . 380000 . 325000

ABC Company's management is considering a special advertising campaign to increase sales in the Soda Profit Center. The advertising campaign will cost $30,000 and should increase sales of the Soda Profit Center by 25%. What will be the overall net effect on the company's net income?

Answer rating: 100% (QA)

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