Synergyica, Inc. is a manufacturer & marketer of gas lamps for utilization in mining & natural

resources operations. Total industry sales in this relevant market were $100 Million, with

Synergyica's market share representing 5%.

Synergyica's contribution margin has steadily been 25%.

Synergyica's salesforce calls on their widespread distributor network to generate revenue. These

distributors in turn sell the products to the industrial customers.

Distributors generate on average revenue of $10,000 per outlet for Synergyica.

Each sales rep earns $50,000 per year.

Synergyica has a corporate advertising & promotions campaign worth $640,000 which has

managed to effectively maintain their brand awareness & image in the resources industry.

(a). Synergyica wants to increase their advertising budget by $200,000 to highlight their green

initiatives and bolster brand presence further in the industry. This cost needs to be expensed.

~ What increase in dollar sales revenue would be needed to recoup this incremental advertising

expenditure?

~ What increase in Synergyica's overall market share does this call for?

(b). Synergyica is seeking to hire 2 more sales reps to expand further territories in their network

by gaining access to additional distributors. Their cost becomes relevant and must be expensed.

~ How many new distributors would be required to cover the cost of hiring these 2 new sales reps?

(c). Synergyica is considering a 10% reduction in the price of its offerings.

~ What absolute increase in its topline would be justifiable to maintain the present level of total contribution dollars?