Principles of Marketing, Deal Sheet Exercise You are a manufacturer of Item X. Y

Question

Principles of Marketing, Deal Sheet Exercise You are a manufacturer of Item X. Your Suggested Unit Retail Price is $180.00. Your profit margin is 30.0% and you are offering the following incentives (Off List Price) to the retail trade sector to encourage retailers to sell your product. The retailer can qualify for Incentives Discounts (%) Requirement to Qualify Provide Off-shelf Display Be a retailer 5.0 30.0 25.0 of qualified Retailer Ad expenditure 10.0 15.0 20.0 2/15 Net 30 Promotional Allowances Trade Discount Cooperative Advertising Pay for Advertising Copy Buy less than 10 cases Buy 10-25 cases Quantity Discount uy 25 plus cases Early Payment Cash Discount You extended the offer to the retailers on Friday, November 3, 2017. The payment received from Emerald Isle (a retailer) occurred Friday, November 17, 2017. Emerald provided you with its advertising copy and a picture of an off-shelf display. Emerald claims their advertising expenditure on the advertising copy was $2,800. Emerald's order is for thirty cases and a case is packed twelve units per case We want to know what price per unit Emerald has to pay after discounts. To help you, fill out the following deal sheet to reflect the qualifying discounts for Emerald. Please note that Discounts are estimated Off List Price; this means that ALL percentage discounts should be estimated using the Suggested Unit Retail Price as a base After you estimate the discount on cooperative advertising expenditure you must divide the discounted dollar amount by#units bought to get discount per unit 2/15 Net 30; Net 30 means the customer has 30 days to pay in full. 2/15 means that the customer will receive a 2% discount if payment is received within the first 15 days. * * Incentives Discounts (%) Qualify? Yes / No IfYes, Discount in Dollars per unit Promotional Allowances Trade Discount Cooperative Advertising Quantity Discount 5.0 30.0 25.0 10.0 15.0 20.0 2.0 Cash Discount QUESTIONS a. After all discounts, what is the price per unit for Emerald? b. From (a), we pay a wholesaler 10% commission to deliver the product to the retailer. How much money does the manufacturer finally get per unit? c. From (b) what is the contribution margin per unit? What is the cost per unit?

Explanation / Answer

Promotional discount (30cases*12units per case*$180per unit) = 64,800*5% = 3240 (3240/360 = 9 per unit)

Trade discount = 64800*30% = 19440 (19440/360 = 54 per unit)

Cooperative advertising discount = 2800*25% = 700 (700/360 = 1.94 per unit)

Quantity discount = 64,800*20% = 12,960 (12,960/360= 36 per unit)

Cash discount = 64800 less all discounts above (64800-3240-19440-700-12960) = 28460*2% = 569 (569/360=1.58per unit)

Cost per unit = 180*70/100 = 126

a. After all discounts price to emerald will be (64800-3240-19440-700-12960-569) = 27891 (27891/360 = 77.47 per unit)

b. 27891-10% commission to wholesaler = 25102 (25102/360=69.7 per unit)

c. Contribution margin per unit =

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