Cosmo is considering a promotional campaign at the Town Store that would not affect the Mall Store.Increasing annual promotional expenses at the Town Store by $60,000 in order to increase Town Store sales by ten percent would result in a monthly increase (decrease)in Cosmo's operating income of:

Question

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The increase in sales at the Town Store would result in additional revenue, but the $60,000 increase in promotional expenses would need to be covered. The monthly increase in operating income is calculated by taking the annual increase in sales, subtracting the annual promotional expenses, and dividing by 12 months. The result is a decrease of $1,400 per month.

Cosmo Is Considering a Promotional Campaign at the Town Store