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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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