Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The group project manager for ointments at American Therapeutics Corporation was reviewing price and promotion alternatives for two products: Rash-Away and Red-Away. Both products ere

The group project manager for ointments at American Therapeutics Corporation was reviewing price and promotion alternatives for two products: Rash-Away and Red-Away. Both products ere designed to reduce skin irritation, but Red-Away was primarily a cosmetic treatment whereas Rash-Away also included a compound that eliminated the rash. The price and promotion alternatives recommended for the two products by their respective brand managers included the possibility of using additional promotion or a price reduction to stimulate sales volume. A volume, price, and cost summary for the two products follows: Rash-AwayRed-Away Unit price$2.35$1.40 Unit variable costs$1.60$0.50 Unit contribution $0.75$0.90 Unit volume1,250,0002,000,000 Both brand managers included a recommendation to either reduce price by 15% or invest in an incremental $200,000 in advertising. a)What absolute increase in unit sales and dollar sales will be necessary to recoup the incremental increase in advertising expenditures for Rash-Away? For Red-Away? Rash Away Unit: b)How many additional sales dollars must be produced to cover each $1.00 of incremental advertising for Rash-Away? For Red-Away? c)What absolute increase in unit sales and dollar sales will be necessary to maintain the level of total contribution dollars if the price of each product is reduced by 15 percent?

Step by Step Solution

3.42 Rating (155 Votes )

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

Principles Of Taxation For Business And Investment Planning 2016 Edition

Authors: Sally Jones, Shelley Rhoades Catanach

19th Edition

1259549259, 978-1259618536, 1259618536, 978-1259549250

More Books

Students also viewed these Marketing questions

Question

How many products are formed when compound B is decarboxylated? , -

Answered: 1 week ago

Question

Compute Cov(X(s), X(t)) for a compound Poisson process

Answered: 1 week ago

Question

2. Talk to other teachers or parents about ideas for reinforcers.

Answered: 1 week ago