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O'Neill, Incorporated's income statement for the most recent month is given below. Total Store A Store B

Sales $300,000 $100,000 $200,000
Variable expenses 192,000 72,000 120,000
Contribution margin 108,000 28,000 80,000
Traceable fixed expenses 76,000 21,000 55,000
Segment margin 32,000 $ 7,000 $ 25,000
Common fixed expenses 32,000
Net Income $ 5,000

The marketing department believes that a promotional campaign at Store A costing $5,000 will increase sales by $15,000. If its plan is adopted, overall company net income should:

a) decrease by $ 3,950.

b) decrease by $ 800.

c) increase by $10,000.

d) increase by $ 4,200.

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  • Category:- Accounting Basics
  • Reference No.:- M984030

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