Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please provide a brief explain on how did you do the calculations. Thanks! GFE is a manufacturer of widgets. They sell their widgets directly to

Please provide a brief explain on how did you do the calculations. Thanks!

GFE is a manufacturer of widgets. They sell their widgets directly to multiple retailers who sell them to end-users (people like you and me).

Assume GFE is considering spending $30,000 more on advertising and that they believe they will be able to sell 40,000 more widgets to the retailers as a result of this increased spending on advertising. The MSRP will remain at $10 and GFE will continue to offer the retailers (the trade) a 10% off the list price as a promotion.

  1. What will be the new Gross Sales Revenue?
  2. What will be the new Trade Promotion total?
  3. What will be the new Cost of Goods Sold?
  4. What will be the new Marketing and Sales Expense?
  5. What will be the new Gross Profit?
  6. What will be the new Gross Profit Margin?
  7. What will be the new Net Marketing Contribution (NMC)?
  8. What will be the new Marketing ROS?
  9. What will be the new Marketing ROI?
  10. Should they go forward with the plan to increase advertising expenditures? Yes or No

DATA

Use the following data to answer the questions about Manufacturing Firm GFE:

Retailers' Sales Revenue from GFE's widgets

$3,000,000

Manufacturer (GFE's) Gross Sales Revenue

$1,800,000

Trade Promotion (10% off)

$180,000

GFE's Net Sales Revenue

$1,620,000

GFE's Cost of Goods Sold (all Variable)

$540,000

GFE's Advertising Expenditure

$50,000

GFE's Sales & Marketing Administration Expenditure

$150,000

GFE's Consumer Promotion Expenditure

$70,000

GFE's Corporate Executive Salary

$70,000

GFE's Research & Development costs

$20,000

GFE's Net Profit before taxes

$720,000

Total Widget Industry Sales at retail

$30,000,000

Manufacturer's (GFE's) Suggested Retail Price/unit

$10.00

GFE's List Price to Retailer

$6.00

Number of Widgets Sold by GFE to retailers

300,000

GFE's ($) Market share

10%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Financial Management

Authors: James R Mcguigan, R Charles Moyer, William J Kretlow

10th Edition

978-0324289114, 0324289111

More Books

Students also viewed these Finance questions

Question

? #include

Answered: 1 week ago