Question

6. A system anticipates that spending $300,000 on an advertising campaign will increase bed days by 650. The marketing department anticipates that each additional bed day will yield $2,100 in additional revenue and will increase costs by $1,700. The campaign a. will reduce profits by $40,000. b. will increase profits by $40,000. c. will increase profits by $90,000. d. will increase profits by $210,000

Answer 1

Answer:

a. will reduce profits by $40,000

Explanation:

A: TR - TC = 650 * 2,100 - [$300,000 + (650 * 1,700)]1,365,000 - 1,405,000 = $ - 40,000

Therefore, this campaign will reduce profits by $40,000