Fun Treats Inc.sells a variety of drink and food products including fruit juice and ice cream.The segmented income statements for these two products are as follows:
$\begin{array}{lcc}
&\underline{\text { Frut Juice} } &\underline{ \text { Ice Cream }}\
\text { Sales } & \$ 500000 & \$ 600000 \
\text { Variable expenses } & \underline{200000} &\underline{ 300000}\
\text { Contribution margin } & 300000 & 300000 \
\text { Traceable fixed expense } &\underline{100000}&\underline{100000} &\
\text { Segment margin } &\underline{ \$ 200000 }&\underline{200000}
\end{array}$

The company's management is considering a special advertising campaign that will run on a Saturday morning when many children are watching television.The advertising campaign is expected to cost $25 000 and only one product can be featured.In-house marketing studies show that the campaign could increase sales of the fruit juice division by $100 000 or increase sales of the ice cream division by $100 000.
The marketing supervisor has decided that since both products have the same segment margin,the company will be equally as well off regardless of which product is featured.
Required:
A. Do you agee ar disagee wrth the marketing sugervest? Why ar why not.
B. Which product do you feel should be featured? Show calculations to support your anfwer.

Question

Fun Treats Inc.sells a variety of drink and food products including fruit juice and ice cream.The segmented income statements for these two products are as follows:
$\begin{array}{lcc}
&\underline{\text { Frut Juice} } &\underline{ \text { Ice Cream }}\
\text { Sales } & \$ 500000 & \$ 600000 \
\text { Variable expenses } & \underline{200000} &\underline{ 300000}\
\text { Contribution margin } & 300000 & 300000 \
\text { Traceable fixed expense } &\underline{100000}&\underline{100000}  &\
\text { Segment margin } &\underline{ \$ 200000 }&\underline{200000}
\end{array}$
 
The company's management is considering a special advertising campaign that will run on a Saturday morning when many children are watching television.The advertising campaign is expected to cost $25 000 and only one product can be featured.In-house marketing studies show that the campaign could increase sales of the fruit juice division by $100 000 or increase sales of the ice cream division by $100 000.
The marketing supervisor has decided that since both products have the same segment margin,the company will be equally as well off regardless of which product is featured.
Required:
A. Do you agee ar disagee wrth the marketing sugervest? Why ar why not.
B. Which product do you feel should be featured? Show calculations to support your anfwer.

Quizplus · Accepted Answer

The Answer of Fun Treats Inc.sells a variety of drink and food products including fruit juice and ice cream.The segmented income statements for these two products are as follows:
$\begin{array}{lcc}
&\underline{\text { Frut Juice} } &\underline{ \text { Ice Cream }}\
\text { Sales } & \$ 500000 & \$ 600000 \
\text { Variable expenses } & \underline{200000} &\underline{ 300000}\
\text { Contribution margin } & 300000 & 300000 \
\text { Traceable fixed expense } &\underline{100000}&\underline{100000}  &\
\text { Segment margin } &\underline{ \$ 200000 }&\underline{200000}
\end{array}$
 
The company's management is considering a special advertising campaign that will run on a Saturday morning when many children are watching television.The advertising campaign is expected to cost $25 000 and only one product can be featured.In-house marketing studies show that the campaign could increase sales of the fruit juice division by $100 000 or increase sales of the ice cream division by $100 000.
The marketing supervisor has decided that since both products have the same segment margin,the company will be equally as well off regardless of which product is featured.
Required:
A. Do you agee ar disagee wrth the marketing sugervest? Why ar why not.
B. Which product do you feel should be featured? Show calculations to support your anfwer.

Fun Treats Inc The Company's Management Is Considering a Special Advertising Campaign That