Mal Co currently sells 25 styles of sports watches. The market has remained static with an

overall revenue of $50 million.

Mal Co is always trying to bring out new designs and colours to try and increase market share

or at least maintain it. In order to not fall behind their competitors, Mal Co tries to bring new

products to the market quickly. Therefore Mal Co undertakes market research one year, and

the results of that market research are incorporated in the new styles/colours that are

launched the next year.

Historically, Mal Co have measured their performance by looking for an increase in the

revenue and net profit figures and ensuring that there is cash in the bank. A new financial

manager has been appointed who is keen to increase the range of performance measures

used by Mal Co.

The following data is available:

Year ended 31 October 20X3

Year ended 31 October 20X4

Revenue

$5.75 million

$6 million

Number of styles

22

25

Net profit

$345,000

$348,000

Market research costs

$200,000

$150,000

Required:

(a)

Calculate:

(i)

Net profit percentage for 20X4

(1.5 marks)

(ii)

Market share for 20X4

(1.5 marks)

(iii)

Increase in revenue

(1.5 marks)

(iv)

Revenue per style of watch for 20X4

(1.5 marks)

(v)

Increase in sales per $ of market research

(2 marks)

(b)

Mal Co are considering setting up another division selling expensive watches. The two

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