Walker Company has current sales of $600,000 and variable costs of $360,000. The companys fixed costs are

Question:

Walker Company has current sales of $600,000 and variable costs of $360,000. The company’s fixed costs are equal to $200,000. The marketing manager is considering a new advertising campaign, which will increase fixed costs by $10,000. She anticipates that the campaign will cause sales to increase by 5 percent as a result.

Required
Should the company implement the new advertising campaign? What will be the impact on Walker’s income?