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Omron Corporation (OMRON), is a Japanese electronics company based in Kyoto, Japan Omron manufactures and sells control equipment factory automation systems, electronic components, automotive electronics,
Omron Corporation (OMRON), is a Japanese electronics company based in Kyoto, Japan Omron manufactures and sells control equipment factory automation systems, electronic components, automotive electronics, ticket vending machines and medical equipment. Mr. Masuta. Chief Marketing Officer, for OMRON is reviewing the 2020 marketing plan for a HVAC control equipment. The installed number of these devices nationwide is estimated to be about 2,000,000 and has been a replacement market rather than a growth market. About 25% of the installed devices are replaced every year. Mr. Nasuta estimates, based on industry secondary data, that OMRON has about a 10% share of market. OMRON markets two versions of these devices: basic and enhanced. Prices vary, but Mr. Masuta estimates that the typical manufacturer selling price of the OMRON basic version (65% of unit sales) is about $850 each. The enhanced version sells for $1,000 and accounts for the remaining sales. The accounting personnel at OMRON estimate that the average material and labor per device, regardless of version, is $200 and $300 respectively. Additionally, each device is charged a $95 production run cost. OMRON provides service on all its devices. In addition to spending $2,500,000 annually on technology service the company sets aside $50 for each device sold to support the product warranty program. OMRON sells its devices through manufacturer's agents rather than using its own sales force. These independent sales people are located in every region and call on businesses in their part of the country. OMRON pays a 6% commission based on the OMRON selling price to its manufacturer's agents. OMRON's promotional activities in 2019 focused on a few but important efforts. OMRON spent a significant amount to keep its manufacturer's agents technically competent to market its products. Twice during the year, the agents attended a 5-day product training meeting to review their performance during the last six months, to comment on their goals for the remainder of the year, and to learn of new developments in the industry as well as about OMRON's product development efforts. These agent conferences cost $200,000 per day. OMRON participated in three 2019 industry trade shows, each costing the firm about $200,000, to display and demonstrate their devices. Advertising in trade publications was a third approach used by OMRON. In 2019, OMRON placed advertisements HVAC control equipment magazines at a cost of $50,000 per month. Finally, OMRONs marketing department developed and printed a number of product information brochures mailed to potential customers, given out at the trade shows and used by the manufacturer's agents to help sell the product at a 2019 total cost of $350,000 In 2020, all these promotional costs expect to repeat. In addition, OMRON plans to participate in two new trade shows at a cost of $280,000 each. Mr. Masuta, while wondering about the sales implications of this is also looking at three competing profit goal scenarios for 2020. These are: (a) a 20% increase in 2019 profits, (b) a 12% return on the approximate $40 million invested in the medical equipment program, and (c) a 6% profit on each sales dollar. Please compare the three profit scenarios in terms of the required 2020 sales in units and dollars. What is the 2019 weighted manufacturer selling price of a device sold by QI. OMRON? NOTE: AFTER Q1, YOU JUST HAVE THE WEIGHTED-AVERAGED SINGLE PRODUCT THAT SELLS AT THE WEIGHTED PRICE THAT IS THE IDEA. THE SIMPLIFICATION OF WEIGHTED AVERAGE. FORGET ABOUT THE TWO VERSIONS! IF YOU DO NOT, YOU WILL TIE YOURSELF UP INTO KNOTS! Separately show OMRON's 2019 non-commission and commission variable costs in one line each. Then, total these to calculate the Unit Variable Cost Therefore, what is OMRON'S 2019 Scontribution per unit and contribution? How many devices were sold by OMRON in 2019? What was their 2019 total $ sales? and what was their 2019 total Scontribution? Itemize and then total OMRON's 2019 fixed costs items. Hence, what was OMRON'S 2019 $ profits? What were OMRON's 2019 #BEP and $BEP? What is OMRON's new fixed cost for 20207 Hence, OMRON's total 2020 fixed cost? What are OMRON's 2020 =BEP and $BEP? Q10abc. What are OMRON's 2020 =RLS and SRLS for each of the 3 profit scenarios? For Q10a and Q10b, first figure out the Sprofit goal and then proceed. For Q10c, start by figuring out the Sprofit per unit, adjust the Q3 SC downward by that amount and calculate #RLS and SRLS for this option. Professor's Partial Excel Hint answers Q10a: #RLS = 56,804 Q10b: $RLS = $50,640,177.50 Q10: #RLS = 44,303 You must match these answers exactly! IMPORTANT: must use roundup function for calculating every BEP and RLS. Calculate SBEP as #BEP USP and SRLS=RLS USP
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