Mark from Mark's Mowers wants to make some changes to his business. He has asked each of his department managers (Production, Marketing, and Sales ) to submit a plan for growth to you the General Manager. Currently, Mark is selling 400 lawn mowers a month at $250 each. His variable cost per lawnmower is $140 each. His fixed cost per month is $ 25,000. For purposes of this project assume that each scenario is within the relevant range (no larger space is needed, no additional people will be needed and no additional fixed cost will be necessary.

The Marketing Department is considering three different alternatives.

1. Do $5,000 in advertising. The Marketing department believes this would increase sales by at least 35 units.

2. Do $ 10,000 in advertising. The Marketing department believes this would increase sales by at least 65 units.

3. Do $ 6,000 in advertising combined with a "sales" price of $225 (a 10% discount). They believe that this would increase sales by at least 50 units.

Question 6. How much money will Mark make in each of the separate situations?

Question 7. Which of the scenarios is best and why?

The Sales Department is also considering three different alternatives.

1. Offer a commission of $ 5 per mower to the sales force. They believe that this will increase sales by at least 20 units.

2. Offer a commission to the sales force of $15 per mower. They believe that this will increase sales by at least 35 units per month.

3. Offer a commission of $ 25 per mower and increase the cost of the mower by $10. Even with the higher price, they believe it would increase mower sales by at least 40 mowers per month.

Question 8. How much money will Mark make in each of the separate situations?

Question 9. Which of the scenarios is best and why?

Question 10. As the General manager of Mark's Mowers which of the above scenarios do you this is best going forward and why?