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(2) Reliant Chairs sells designer seating to consumers through retail outlets. Total industry sales for the market last year were $128 million, with Reliants sales

(2) Reliant Chairs sells designer seating to consumers through retail outlets. Total industry sales for the market last year were $128 million, with Reliants sales representing 6.5% of that total. Contribution margin is 18%. Reliants sales force calls on retail outlets and each sales rep earns $45,500 per year, plus 2.5% commission on all sales. Retailers receive a 38% margin on selling price and generate average revenue of $12,000 per outlet for Reliant. a. The marketing manager has suggested increasing customer advertising by $200,000. By how much would dollar sales need to increase to break even on this expenditure? What increase in overall market share does this represent? b. Another suggestion is to hire 3 more sales representatives to gain new consumer retail accounts. How many new retail outlets would be necessary to break even on the increased cost of adding the 3 sales reps? c. A final suggestion is to make a 10% price reduction across the board. By how much would dollar sales need to increase to maintain Reliants current contribution margin? d. Which suggestion do you think Reliant should implement? Explain your recommendation

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