Order answer: Pam and Lenny s ice cream shop charges 1 25 for a cone

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Order answer: Pam and Lenny s ice cream shop charges 1 25 for a cone

Pam and Lenny’s ice-cream shop charges $1.25 for a cone. Variable expenses are $0.35 per cone, and fixed costs total $1,800 per month. A “sweetheart” promotion is being planned for the second week of February. During this week, a person buying a cone at the regular price would receive a free cone for a friend. It is estimated that 400 additional cones would be sold and that 600 cones would be given away. Advertising costs for the promotion would be $120. Required: a. Calculate the effect of the promotion on operating income for the second week of February. b. Do you think the promotion should occur? Explain your answer.

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