You are hired as a marketing manager to improve the business performance of a local health supplement chain. You recommend increasing the social media budget to increase sales.

You estimate that Revenue/sales will grow at a7%increase every year if the social media budget is increased8%every year for thenext 3 years.

Using the following information in the assumption area, please come up with a 3-yearprojectedincome statement template for scenario analysis to give answers to the next questions.

You maycopy and pastethe following into Your Name Excel workbook and name this as a second worksheetIncome.

Assumption Area

Current Year

New Plan with Social Media

(in thousands)

Growth rate every year

Sales

$ 8,766.0

7%

Cost of Goods Sold as a Percentage of Sales

39%

Gross Profit

Marketing Mix Expenses:

(000's)

Social Media

$ 235.0

8%

Production Costs

$ 45.0

Promotion Costs

$ 37.0

Selling

$ 37.0

Total marketing mix expenses

(000's)

Fixed Costs

$ 4,723.0

Please indicate a numericanswer in the space at the end of each question.

A. The value of gross profit in Year 1 of your new plan is $___

B. The value of Total marketing mix expenses in year 3 is ___

C. The value of Average Net Income of 3 years is $___

D. The required annual growth rate in sales to generate a $1.5 million average net income is ___ %

(Hint: use Goal Seek)