Question
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.
- What will be the new Gross Sales Revenue?
- What will be the new Trade Promotion total?
- What will be the new Cost of Goods Sold?
- What will be the new Marketing and Sales Expense?
- What will be the new Gross Profit?
- What will be the new Gross Profit Margin?
- What will be the new Net Marketing Contribution (NMC)?
- What will be the new Marketing ROS?
- What will be the new Marketing ROI?
- 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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started