GROUP 5 Contribu here PROBLEM: Sales Strategies Nova Company sells cosmetics through door-to-dour salespeople who receive 25% commissions. Nova's national sales manager has been evaluating alternative selling strategies for the coming season. She is trying to decide whether any products should be discounted in price by Me, receive increased promotional efforts, or be left alone. She is now considering four products, data for which are as follows. Mascara Excliner Lipstick Cologne Normal Selling Price $2:50 $2.20 $2.00 $12.00 Variable Cost 1400 5.0.1 Contribution Margin $1.GO $1.20 $1.20 Expected volumes: Without discount or special Promotion (units) 8OO,000 750,000 2000,000 200,000 With 30%% discount 1,650,000 1,350,000 3,200,000 With special promotion 950,000 920,060 2,150,000 . 240,500 If the special promotion is chosen for a particular product, its price and variable cost will remain the same. Additional fixed costs are $200,000 for each product selected, primarily for advertising and incentive payments to salespeople. If a product is selected for a 30%% price cut, variable costs will remain the same per unit, because Nova pays sales commissions on the basis of the nominal selling price even during such special sales. Required For each product, determine which of the following should be done. reduce price, do a special promotion, or do nothing. 2 Discuss some additional factors that might influence the sales manager's decisions about each product. CVP - point of decision making break - even