The data below is estimated for ABC Co.s next year of operations.

Sales $8,000,000 100.00% Variable Costs $3,500,000 43.75% Contribution Margin $4,500,000 56.25% Fixed Costs $3,000,000 Profit $1,500,000

ABC Co. management believes that a $500,000 advertising campaign with Google Analytics will cause sales to increase 30%. Determine the affect on profit and answer questions 12 and 13. If the company buys a new machine for the factory sales will go up an estimated 18% but fixed costs will increase 6%. Determine the affect on profit and answer questions 14.

12. The increase in the contribution margin is: a. $667,000 c. $540,000 b. $881,000 d. None of the above

13. The increase in profit is: a. $960,000 c. $540,000 b. $850,000 d. None of the above

14. The affect on profit for the next year from buying the new machine is: a. $120,000 decrease c. $630,000 increase b. $120,000 increase d. None of the above