You are the manager in charge of global operations at BankGlobal – a large commercial bank that operates in a number of countries around the world. You must decide whether or not to launch a new advertising campaign in the U.S. market. Your accounting department has provided the accompanying statement, which summarizes the financial impact of the advertising campaign on U.S. operations. In addition, you recently received a call from a colleague in charge of foreign operations, and she indicated that her unit would lose $8 million if the U.S. advertising campaign were launched. Your goal is to maximize BankGlobal's value. Pre-Advertising Campaign Post-Advertising Campaign Total Revenues $18,610,900 $31,980, 200 Variable Cost TV Airtime 5,750,350 8,610,400 Ad development labor Total variable costs 1,960,580 3,102,450 7,710,930 11,712,850 Direct Fixed Cost Depreciation - computer equipment 1,500,000 1,500,000 Total direct fixed cost 1,500,000 1,500,000 Indirect Fixed Cost Managerial salaries Office supplies 8,458,100 2,003,500 8,458,100 2,003,500 Total indirect fixed cost $10,461,600 $10,461,600 Should you launch the new campaign? Explain.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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You are the manager in charge of global operations at BankGlobal – a large commercial bank that operates in a
number of countries around the world. You must decide whether or not to launch a new advertising campaign in the
U.S. market. Your accounting department has provided the accompanying statement, which summarizes the
financial impact of the advertising campaign on U.S. operations. In addition, you recently received a call from a
colleague in charge of foreign operations, and she indicated that her unit would lose $8 million if the U.S.
advertising campaign were launched. Your goal is to maximize BankGlobal's value.
Post-Advertising Campaign
$31,980, 200
Pre-Advertising Campaign
Total Revenues
$18,610,900
Variable Cost
TV Airtime
5,750,350
1,960,580
7,710,930
8,610,400
Ad development labor
Total variable costs
3,102,450
11,712,850
Direct Fixed Cost
Depreciation - computer
equipment
1,500,000
1,500,000
Total direct fixed cost
1,500,000
1,500,000
Indirect Fixed Cost
Managerial salaries
Office supplies
8,458,100
8,458,100
2,003,500
2,003,500
Total indirect fixed cost
$10,461,600
$10,461,600
Should you launch the new campaign? Explain.
Transcribed Image Text:You are the manager in charge of global operations at BankGlobal – a large commercial bank that operates in a number of countries around the world. You must decide whether or not to launch a new advertising campaign in the U.S. market. Your accounting department has provided the accompanying statement, which summarizes the financial impact of the advertising campaign on U.S. operations. In addition, you recently received a call from a colleague in charge of foreign operations, and she indicated that her unit would lose $8 million if the U.S. advertising campaign were launched. Your goal is to maximize BankGlobal's value. Post-Advertising Campaign $31,980, 200 Pre-Advertising Campaign Total Revenues $18,610,900 Variable Cost TV Airtime 5,750,350 1,960,580 7,710,930 8,610,400 Ad development labor Total variable costs 3,102,450 11,712,850 Direct Fixed Cost Depreciation - computer equipment 1,500,000 1,500,000 Total direct fixed cost 1,500,000 1,500,000 Indirect Fixed Cost Managerial salaries Office supplies 8,458,100 8,458,100 2,003,500 2,003,500 Total indirect fixed cost $10,461,600 $10,461,600 Should you launch the new campaign? Explain.
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