Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 56

Shown below is a segmented income statement for Drexel-Hall during the current month:
All stores are similar in size, cam similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores.
The marketing manager of Drexel-Hall is considering two alternative advertising strategies, each of which would cost S15.000 per month. One strategy is to advertise the name Drexel-Hall, which is expected to increase the monthly sales at all stores by 5 percent. The other strategy is to emphasize the low prices available at Store 2, which is expected to increase monthly sales at Store 2 by $150.000, but to reduce sales by $30.000 per month at Stores 1 and 3.
Determine the expected effect of each strategy on the company's overall income, from operations.