You are a manufacturer of Item X. Your Suggested Unit Retail Price is $180. You are offering the following incentives (Off List Price) to the retail trade sector to encourage retailers to sell your product. The retailer can qualify for:

Incentives Discounts (%) Requirement to Qualify

Promotional Allowances 5 Provide Off-shelf Display

Trade Discount 30 Be a retailer

Cooperative Advertising 25 of qualified

Retailer Ad expenditure Pay for Advertising Copy

Quantity Discount 10 Buy less than 10 cases

15 Buy 10-25 cases

20 Buy 25 plus cases

Cash Discount 2/15 Net 30 Early Payment

You extended the offer to the retailers on Friday, November 3, 2017. The payment received from Emerald Isle (a retailer) occurred Friday, November 17, 2017. Emerald provided you with its advertising copy and a picture of an off-shelf display. Emerald claims their advertising expenditure on the advertising copy was $2,800. Emeralds order is for thirty cases and a case is packed twelve units per case.

We want to know what price per unit Emerald has to pay after discounts. To help you, fill out the following deal sheet to reflect the qualifying discounts for Emerald. Please note that:

• Discounts are estimated Off List Price; this means that ALL percentage discounts should be estimated using the Suggested Unit Retail Price as a base.
• After you estimate the discount on cooperative advertising expenditure you must divide the discounted dollar amount by #units bought to get discount per unit.
• 2/15 Net 30; Net 30 means the customer has 30 days to pay in full. 2/15 means that the customer will receive a 2% discount if payment is received within the first 15 days.

Incentives Discounts (%) Qualify? If Yes, Discount in

Yes / No Dollars per unit

Promotional Allowances 5.0

Trade Discount 30.0

Cooperative Advertising 25.0

Quantity Discount 10.0

15.0

20.0

Cash Discount 2.0

QUESTIONS:

a. After all discounts, what is the price per unit for Emerald?

b. What is the contribution margin per unit for Emerald? What is the CMR for Emerald?

c. If your unit cost is $50 dollars, are you making money? If yes, what is the contribution margin per unit (off list price) and the CMR? If you are not making money, how much is the loss?