Question
Problem EquipBaby runs a shop selling equipment for babies within 3 main ranges. Figures for the past month are as follows: Pushchairs Sales revenue
Problem EquipBaby runs a shop selling equipment for babies within 3 main ranges. Figures for the past month are as follows: Pushchairs Sales revenue 50,000 Car Seats 15,000 Accessories Total 12,000 77,000 -Variable cost 35,000 10,000 6,000 51,000 - Contribution margin 15,000 5,000 6,000 26,000 Contribution margin ratio 30.00% 33.33% 50.00% 33.77% Direct fixed cost -wages 1,750 1,750 4,500 8,000 -rent 6,000 2,000 3,000 11,000 -Segment margin 7,250 1,250 -1,500 7,000 Indirect fixed cost Profit 5,000 2,000 Prepare Calculate the sales revenue that will generate a zero segment margin for the "Accessories" range What would be the segment margin of this range if monthly sales revenue amounted to 13,000? If 13,000 is the maximum possible sales revenue for the 'Accessories' range, should EquipBaby keep selling this range of products? (justify your answer and mention your assumptions) . In order to promote its shop, the company is thinking of making a local advertising campaign, which would cost 10,000. By what percentage have the overall sales to increase if this campaign is to be profitable in a quarter [3 months]? (mix of sales will be assumed to remain the same than in the above table)
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