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Validate the below work AB Chemicals Baseline Scenario 1 Scenario 2 (increase price) (increase price, distributor support cost & Retailer promo cost) Unit Cost $3.00

Validate the below work

AB Chemicals
Baseline Scenario 1 Scenario 2
(increase price) (increase price, distributor support cost & Retailer promo cost)
Unit Cost $3.00 $3.00 $3.00
Unit Revenue (price) $5.00 $10.00 $10.00
Share of Market Potential 5.00% 2.00% 2.00%
Sales Volume 200,000 80,000 80,000
Sales Revenue $1,000,000 $800,000 $800,000
Gross Margin % 40.00% 70.00% 70.00%
Gross Margin $ $400,000 $560,000 $560,000
Distributor Support Costs (10% sales revenue) $100,000 $80,000 15% sales revenue $120,000
Retailer Promotion Costs (15% sales revenue) $150,000 $120,000 20% sales revenue $160,000
Operating Margin $ (Year 1 Margin) $150,000 $360,000 $280,000
Growth Rate (every year) 5.00% 5.00% 5.00%
Year 2 Margin $157,500 $378,000 $294,000
Year 3 Margin $165,375 $396,900 $308,700
Wholesaler/Distributor (aggregated)
Purchase Costs (i.e., sales revenue of producer) $1,000,000 $800,000 $800,000
Wholesaler/Distributor Markup (15%) $150,000 $120,000 $120,000
Sales Revenue $1,150,000 $920,000 $920,000
Operating Margin (38% of Markup) $57,000 $45,600 $45,600
Distributor support income (cost = 50% of Distributor support costs) $50,000 $40,000 $60,000
Total $107,000 $85,600 $105,600
Retailers (aggregated)
Purchase Costs (i.e., sales revenue of wholesaler/distributor ) $1,150,000 $920,000 $920,000
Retailers Markup (25%) $287,500 $230,000 $230,000
Sales Revenue $1,437,500 $1,150,000 $1,150,000
Operating Margin (40% of markup) $115,000 $92,000 $92,000
Retailer promotion income (cost = 30% of Retailer Promotion Costs) $45,000 $36,000 $48,000
Total $160,000 $128,000 $140,000

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