Marketing Math Assignment $1$

Instructions: Make sure to show all your steps and formulas used to arrive at the answers. Points will be deducted if the steps are not shown.

Ready$-$To$-$Go is a small company that sells meal kits for $$45.$ The cost of the materials that go into each kit is $$10.$ In addition, the company charges a delivery fee of $$5$ per kit. The company has monthly expenses of $$750$ for rent and insurance, $$200$ for heat and electricity, $$350$ for advertising, and $$5000$ for the monthly salary of its owner. Last month the company sold $300$ kits. Calculate the following for Ready$-$To$-$Go:

Contribution per unit and total contribution

Monthly Profits I

Break$-$even point in units and dollars

Suppose Ready$-$To$-$Go wants to make a target profit of $$5000.$ How many kits would the company have to sell to achieve its target profit? Assume price, fixed and variable costs remain same as before.

To cater to the health conscious segment, Ready$-$To$-$Go decides to switch over to organic ingredients which increases the cost of materials that go into each kit from $$10$ to $$15.$ Delivery charges also go up from $$5$ to $$7.$ Due to increasing costs, the company decides to increase its price from $$45$ to $$55.$ This decreases the quantity sold to $280$ kits.

Calculate the new

a$.$ Contribution per unit

b$.$ Break$-$even point in units and dollars

c$.$ The new monthly profits

d$.$ Compare the new profits found in question $5c$ to the profits in question $2.$ Did it increase or decrease? Explain why you think the increase or decrease happened.