KA brewer is launching a new product brewed ginger ale with a low alcohol content The brewer plans to spend 54million promoting this product this year, which is expected to expand its sales of this product to $10 million this yearand $8 million next year. They do expect there will be loss of sales of $1 million this year and next year in their otherproducts as customers switch to drinking the new ginger ale. The gross profit margin for the new ginger ale is 40%, thegross profit margin of all of the brewer's other products is 30%, and the brewer's marginal corporate tax rate is 35%What are incremental earnings arising from the promotional campaign this year?OA. $1.95 millionOB. $4.68 millionOC. $8.00 millionOD. $5.28 millionOE. $4.29 million

Note: The next year's incremental sales of $8 million will not be considered because the question…

Answered: A brewer is launching a new product…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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