Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a small business selling bottles of 321 BlatzOff, a reasonably nasty-tasting energy drink. 1. You have a small business selling bottles of 321

You have a small business selling bottles of 321 BlatzOff, a reasonably nasty-tasting energy drink. image text in transcribed
1. You have a small business selling bottles of 321 BlatzOff, a reasonably nasty-tasting energy drink. .You sell each bottle of 321BO for $6.00. Each bottle costs you $2.50 to purchase from the manufacturer. You pay your salesperson a 10% commission on all sales on top of a base salary of S 1,500 per month. .Your rent is $1,200 per month. Other miscellaneous costs (insurance, utilities, etc.) average $600 per month. You are pretty sure you can sell 1,200 bottle per month at the $6.00 price point. . How many bottles do you need to sell to breakeven each month (round up to the nearest whole bottle)? How much monthly income will you have if you sell 1,500 bottles per month? A. B. You are considering offering a 20% off coupon for each bottle to increase sales. You think sales will increase to 2,400 bottles per month (assuming each bottle will be purchased with a coupon). A fixed coupon processing fee of $700 will be incurred each month if you choose this strategy. How many bottles will you need to sell each month to breakeven with the coupon strategy (round up to the nearest whole bottle)? Assume sales commissions will still be based on the $6.00 "list price." How much monthly income will you have if you sell 3,000 bottles each month with this coupon strategy? C. D. Another option you are considering involves spending $4,000 per month on an advertising campaign. You think that you can raise monthly sales to 2,400 bottles at an undiscounted sales price of $6.00 (i.e, no coupons, etc.). How many bottles will you need to sell each month to breakeven with the advertising strategy (round up to the nearest whole bottle)? How much monthly income will you have if you sell 3,000 bottles each month with the advertising strategy? E. F. Which strategy would be best if you thought you could sell 2,800 bottles per month either with the coupons or the advertising? In other words: G. How much income would you make with the coupon strategy if you were able to sell 2,800 bottles per month? How much would you make with the advertising strategy if you were able to sell 2,800 bottles per month? H

Step by Step Solution

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

Deadly Audit A Buckeye Barrister Mystery

Authors: David M Selcer

1st Edition

0988194368, 978-0988194366

More Books

Students also viewed these Accounting questions

Question

Why could the Robert Bosch approach make sense to the company?

Answered: 1 week ago