Answer:
Effect on income= $9,800
Explanation:
Giving the following information:
Cost of advertising campaign $25,000
Variable expense as a percentage of sales 42%
Increase in sales $60,000
We need to calculate the effect on income. The increase in sales will increase the income, but, the marketing campaign and the variable cost will decrease it.
Effect on income= Increase in sales - increase in variable costs - advertising cost
Effect on income= 60,000 - (60,000*0.42) - 25,000= $9,800
