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  3. 10. a company believes that if it spends $25,000 o

10. A company believes that if it spends $25,000 on an advertising campaign for one...

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Accounting

10. A company believes that if it spends $25,000 on an advertising campaign for one of its segments, there will be a 20% increment in the segments sales. The contribution margin for the segment is 60% of sales. Sales for the segment are expected to be $400,000 before the advertising campaign. The relationship of costs to sales is expected to remain the same. The incremental net operating income, if the advertising campaign is undertaken, is expected to be:

a. $23,000

b. $18,000

c. $ 9,000

d. $ 9,000 loss

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