A Company Has Variable Costs That Are 1/8 the Value

question 32

Multiple Choice

A company has variable costs that are 1/8 the value of their sales revenues. Total net income for the most recent period was a profit of $50 400 and sales were $500 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $15 000. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

• A) $517 142.86
• B) $387 100.00
• C) 392 100.00
• D) $387 100.86
• E) 392 100.86

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Definitions:

Promotional Activities

Marketing efforts aimed at increasing consumer awareness of a product or brand, encouraging purchases through various strategies like advertising, sales promotions, and events.

Super Influencers

Individuals with a vast and highly engaged following on social media, possessing significant influence over their audience’s purchasing decisions.

Opinion Leaders

Individuals who influence others' attitudes or behaviors because they are considered knowledgeable, authoritative, or otherwise influential in a particular domain.

Potential Consumers

Individuals or groups who are identified as likely purchasers or users of a product or service, based on certain characteristics or behaviors.