Nielsen Associates provides marketing services for a number of small manufacturing firms. Nielsen receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $0.02 per sales dollar Sales-level costs $200 per sales order Customer-level costs $800 per customer per year Facility-level costs $60,000 per year
(a) Determine the minimum order size in sales dollars for Nielsen to break even on an order.
(b) Assuming an average customer places five orders per year, determine the minimum annual sales required to break even on a customer
(c) What is the average order size in (b)?
(d) Assuming Nielsen currently serves 100 customers, with each placing an average of five orders per year; determine the minimum annual sales required to break even.
(e) What is the average order size in (d)?