Trans Sport Company sells sporting goods to retailers in three different states—Florida, Georgia, and Tennessee. The following profit analysis by state was prepared by the company:

In addition, assume that inventories have been negligible. Management believes it could increase state sales by 20%, without increasing any of the fixed costs, by spending an additional $ 42,200 per state on advertising.
1. Prepare a contribution margin by state report for Trans Sport Company.
2. Determine how much state operating profit will be generated for an additional $ 42,200 per state on advertising.
3. Which state will provide the greatest profit return for a $ 42,200 increase in advertising?Why?

  • CreatedJune 27, 2014
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