Question
Hi class, I think the business will benefit more with a salesperson eliminated. The strategy to reduce budgeting amount on advertising could affect the ability
Hi class,
I think the business will benefit more with a salesperson eliminated. The strategy to reduce budgeting amount on advertising could affect the ability to bring in new customers to the business which would hurt overall sales, so I think it's important to keep the budget for advertising, to help bring in customers to buy.
Gross margin = $1,000,000 x 48/148 = $324,324
Selling Salaries Reduced:
Wrapping and packing: $10,000
Receiving and making $15,000
Buying salaries = $125,000
= $150,000
Net profit: $324,324 - $150,000 = $174,324
Selling Salaries: $275,000 - $50,000 = $225,000
Advertising: $90,000
= $315,000
Net loss: $174,324 - $315,000 = (-$140,676)
Advertising Budget Reduced:
Wrapping & Packing + Receiving & Making + Buying Salaries
$10,000 + $15,000 + $125,000 = $150,000
324,324 - 150,000 = 174,324
Net profit = $174,324
Selling salaries + Advertising
275,000 + 50,000 = 325,000
Net loss = (-$150,076)
In response to your peers, compare your chosen strategy. Is there another option that you as a manager could make that would effectively increase profits?
what your point of view of the statement
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