Attempt both questions. Answer all parts of each question. You may submit your quiz independently or with 1 other student. Equal participation is assumed under the ?honor system.? Each question is worth 50 points. You MAY have an oral examination to explain your answers. Explain your logic in each instance. Note: Dr. Mark Rosenberg is president of FIU. Dr. Anthony Miyazaki is Chair of FIU?s Marketing Department. 1. The Miyazaki Balderdash Company has two brands (?A? & ?B?). Price and cost data for each are presented below. ?A? ?B? Unit price $3.75 $4.05 Unit variable costs $2.25 $2.25 Unit volume/year 750,000 units 1,250,000 units Annual Promotional expense $500,000 $750,000 a) Calculate the unit contributions and contribution margins for each brand at the unit level. What are the respective brand contributions of ?A? and ?B? to the Miyazaki Company. i) ?A? Unit Contribution ii) ?B? Unit Contribution b) It has been proposed that the price of each brand be reduced by 15% New price for A = New price for B = What would be the new unit contribution and contribution margin for each brand? ?A? ?B? c) Compute the approximate elasticity of demand that would result in no change in total contribution for Brand ?A? and Brand ?B?, respectively, after implementing the 15% price cuts. Without any further information which brand would you recommend for a price cut if management is profit oriented? Explain! (In this element of the question ignore the annual promotional expense) ?A? ?B? YOU CAN GUIDE YOURSELF WITH THE ATTACHMENTS

Fall 2012 MAR 4804/U01M Dr. Bruce Seaton Financial Quiz Attempt two (of three) questions. Answer all parts of each question. The third question is based on the Palladium case. You may submit your quiz independently or with 1 other student. Equal participation is assumed under the \"honor system.\" Note: Dr. Mark Rosenberg is president of FIU. Dr. Walfried Lassar is Chair of FIU's Marketing Department. 1. The Lassar Balderdash Company has two brands (\"A\" & \"B\"). Price and cost data for each are presented below. \"A\" \"B\" Unit price $3.35 $4.25 Unit variable costs $2.05 $2.45 Unit volume/year 750,000 units 1,250,000 units a) Calculate the unit contribution and contribution margin for each brand: i) \"A\" Contribution Margin C=P-V 3.35-2.05=1.3 Unit Contribution 3.351.3/3.35=39% ii) \"B\" C=P-V 4.25 - 2.45 = 1.8 Unit Contribution 1.8/4.25=.42% b) It has been proposed that the price of each brand be reduced by 15% What would be the new unit contribution and contribution margin for each brand? \"A\" New Price 2.85 Contribution Margin 2.85-2.05=.80 Unit Contribution .8/2.85=.28% \"B\" New Price = 3.61 Contribution Margin 3.61-2.45=1.16 Unit Contribution 1.16/3.61 c) Compute the approximate elasticity of demand that would result in no change in total contribution for Brand \"A\" and Brand \"B\A Unit price Unit variable costs Unit volume/year Annual Promotional expense Total Variable Cost Contribution Margin Unit Contribution New Price New Contribution Margin New Unit Contribution B 3.75 2.25 750000 500000 1687500 4.05 2.25 1250000 7500000 2812500 1.5 40% 3.19 0.94 29% 1.8 44% 3.44 1.19 35%