Assumptions: Overall: Fixed costs are same as previous year. Strategy 1 (Status Quo): List price stays at S18.50, volume and COGS ($7.68/case) are same as previous year, price discounts, ad allowances, other adcoupons, selling and admin grow at same rate as previous year. Strategy 2a: List price stays at $18.50, volume same as last year, COGS (S7.53) are 2% less than previous year, no price discounts, ad budget increased by $1,000,000, co-op ad spending increased by $500,000 Strategy 2b: List price stays at $18.50.COGS ($7.53) are 2% less than previous year, no price discounts, ad budget increased by S1,000,000, co-op ad spending increased by S500,000, volume drops by 10% due to retailer and competitor reaction Strategy 3: COGS ($7.53) are 2% less than previous year, list price is cut 10%, no price discounts, volume same as last year, ad allowance and ad budget same as previous year Exhibit A: Pro-Forma Income Statements for Alternative Strategies Strategy 1 Strategy 2a Strategy 2b Strategy3 1990 1991 1992 1993 Revenue Number of Cases Sold 1,095,322 1,126,894 1,126,894 List price per case $17.50 $18.00 $18.50 so sO S20,847,539 S8,654,365 Total Revenue S19,168,135 S20,284,092 sO SO Cost of Goods Sold S8,654,365 S10,930,593 S11,629,727 $8,237,542 Gross Contribution S12,193,174 so so sO xpenses Promotional Price Discounts S1,943,336 $2,347,693 $2,836,186 Ad Allowance for Retailers $494,322 S563,267 S641,828 Other Ad/Coupons/Samples S2,182,111 S2,277,883 S2,377,858 Selling and Admin S2,278,780 $2,345,321 S2,413,805 General Overhead $2,382,198 $2,467,455 $2,467,455 $2,467,455 $2,467,455 $2.467,455 $2,467,455 Net Contribution S1,649,846 $1,628,108 S1,456,042 -S2,467,455 -$2,467,455 -S2,467,455 -$2,467,455