retail selling price. The retailer margin was at 7 percent of the retail price. In 1988, excise and octroi taxes were together totalling to 5% of the retail selling price.

Production department transferred Rin at Rs. 3.6 per unit to marketing department. Marketing department has planned to spend 1 Mn. on selling plus transportation costs and about Rs. 3.5 Mn. on advertising expenses.

a) What is the unit contribution? How many bars of RIN would be required to be sold in 1988 by Lever Brothers to break-even? How much sales in units Rin NSD bar is expected to make in 1988? What is the Gross Marketing Contribution? What is the Net Marketing Contribution?

b) If active fabric wash ingredient is removed from Rin it can still be sold for dish washing purpose. In such a case, the production cost per unit is likely to be reduced by 1/3 of the current transfer cost. However, as the market for dishwashing bars is just 60,000 tonnes with high competition and the repositioning exercises may have negative impact on the sales of Rin. Rin brand manager expects that the sales may reduce to 2/3 of the current sales even if the marketing cost is increased by 20%. If Lever Bros decide to sell Rin as dishwasher, what would be the break-even quantities (in number of bars) required? What would be the net marketing contribution? How much additional profit (net contribution) the brand can add if it sells as a dish washer?