C&C Sports Continuing Case 3-42 Universel Sports Exchange has just received notice from C8C Sports tha the price of a baseball jersey Wil be increasing to $15.30 next year. In response to this increase, Universal is planring its sales and market ing campaign for the coming year. Managers have developed two possble plans and heve asked you to evaluate them 0.50 cost customers through er increese in he sa es proe. Mene ers believe that $10,000 additional advertising targeted directly to current customers will allo\ e sales ce to re h the a ent year's sales volume The st ple calls or pessing on the entire of 51,975 jerseys cree e The second plan relies on a new edvertising campaign that focuses on te sales price rema ning the same as last year. The campaigni would include a new detatese that offers more potential custurners than Universal has had access to in the past. The cast of the campaign is expected to be $5,000. Managers beieve that the campaign will be more successful in generating new sales than the current incentive-based sales and marketing plan. As a resut, they want to reduce the seles commission from 6% to 4 of sales and increase sales salaries by 22,000. The campaign is expected to generate an addtional 10% in sales volure UNIVERSAL SPORTS EXCHANGE for the 52 Weeks Ending February 1, 2014 Per Unit Ratio Sales $1,039,500 20.00 100% Less Vanlable expenses: Cost of goods sold Sales commissions $769,230 62,370 14.80 1.20 16.00 $4.00 74% 6% B0% 20% Total variable cxpenscs 831,600 Contribution margin Less Fixed expenses: Selling expenses 207,900 116,500 1,500 Administrative expenses 169,000 $39,900 Total fixed expenses Operating income