Jen and Barry's ice cream shop charges $1.45 for a cone. Variable expenses are $0.28 per...

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Jen and Barry's ice cream shop charges $1.45 for a cone. Variable expenses are $0.28 per cone, and fixed costs total $2,200 per month. A Valentine's Day promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 775 additional cones would be sold and that 975 cones would be given away. Advertising costs for the promotion would be $160. Required: a. Calculate the effect of the promotion on operating income for the second week of February. b. Do you think the promotion should occur? Jen and Barry's ice cream shop charges $1.45 for a cone. Variable expenses are $0.28 per cone, and fixed costs total $2,200 per month. A Valentine's Day promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 775 additional cones would be sold and that 975 cones would be given away. Advertising costs for the promotion would be $160. Required: a. Calculate the effect of the promotion on operating income for the second week of February. b. Do you think the promotion should occur?

Answer rating: 100% (QA)

To calculate the effect of the promotion on operating income for the second week of February we need to consider the additional revenue from the sale ... View the full answer