I need to answer these questions. This is a Marketing Research course. Applicati

Question

I need to answer these questions. This is a Marketing Research course.

Application lb: MARKETING SCENARIO (TO RECEIVE FULL CREDIT ALL FORMULAE AND CALCULATIONS MUST BE SHOWN) 1. Given: Total Sales Direct Labor Costs per Unit $1.40 Customer Delivery Costs per Unit S0.50 Labeling Costs per Unit Packaging Costs per Unit Advertising Cost Depreciation Rent Total Units Sold Total Assets Equity Investment 5380,000 $0.10 S0.20 $50,000 $20,000 $25,000 90,000 $225,000 $75,000 a. (4 Pts) Set up the firm's Income Statement and Balance Sheet (2 Pts) Calculate Total Contribution Margin Dollars and as a Percentage of Sales b. c. (4 Pts) Set up the firm's Strategic Profit Model

Explanation / Answer

Requirement a Income statement Per unit Amount in $ Sales units=90000 4.222222 380000 Less : Variable costs Direct Labor costs 1.4 126000 Customer Delivery costs 0.5 45000 Labeling costs 0.1 9000 Packaging costs 0.2 18000 Total variable costs 2.2 198000 Contribution margin 182000 Fixed costs Advertising cost 50000 Depreciation 20000 Rent 25000 Total fixed costs 95000 Net Operating Income 87000 Balance sheet Total asset 225000 Equity Investment 75000 Retained earning & other liabilities 150000 Total Liabilities & shareholder's equity 225000 Requirement b Total contribution margin dollars & as a percentage of sales Total contribution margin 198000 as a % of sales =198000/380000% 52.11 % Requirement c Firm's stratergic profit model is based on variable costing whereby firm will sell the product at anything above variable costs after recovering the fixed costs in the initial sale. Extra credit requirement If new contribution margin is 50% The new Break even point in dollars will be =Total fixed costs/new contribution margin in % =95000/50% = 190000

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