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Kokomochi is considening the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend \$5.67 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $8.73 million this year and $6.73 milion next year. In addition, the cornpany expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomochi's other products. As a result, sales of other products are expected to rise by $3.13 milion each year. Kokomochis gross profit margin for the Mini Mochi Munch is 36\%, and its gross profit margin averages 25\% for all other products. The company's marginal corporate tax rate is 38% both this year and next year. What are the incremental earnings associated with the advertising campaign? Note: Assume that the company has adequale positive income to take advantage of the tax benefits provided by any net losses associated with this campaign. Incremental Earnings Forecast (\$ million) Sales of Mini Mochi Munch Other Sales Cost of Goods Sold Gross Profit Selling, General, and Administrative Depreciation Sales of Mini Mochi Munch Other Sales Cost of Goods Sold Gross Profit Selling, General, and Administrative Depreciation EBIT Income Tax at 38\% Incremental Earnings

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