As an Operations Manager (OM) of a million dollar furniture manufacturing firm, you have been asked by your General Manager to work with your colleagues in Marketing and Finance to determine who is able to provide the greatest gain in increasing the bottom line contribution to the companys profit.

1. Complete the table below and determine the net contribution to profit of each functional area. Note that your GM has provided the required targets for each functional area as compared to the current situation. (11 marks)

2. You have a capex budget of $200,000 and that there are no implementation costs for either Marketing or Finance. Provide a brief recommendation (100 words) to your GM regarding the best approach to increasing profit. (4 marks)

		Current	Marketing Option	Financing Option	OM Option
			Increase Sales Revenue	Reduce Finance Costs	Reduce Production Costs
		Targets	55%	75%	25%
Sales		$ 1,100,000
Cost of Goods		$ 850,000
Gross Margin		$ 250,000
Finance Costs		$ 110,000
Subtotal		$ 140,000
Company Tax	30%	$ 42,000
Contribution		$ 98,000
Change
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