Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Zeen by Cambridge sells hand-knit sweaters. Zeen is planning to print a catalog of its products and undertake a direct mail campaign. The cost

Zeen by Cambridge sells hand-knit sweaters. Zeen is planning to print a catalog of its products and undertake a direct mail campaign. The cost of printing the brochure is Rs. 220,000 plus Rs10 a catalog. The cost of mailing each catalog is Rs.200. In addition, the company will include direct reply envelopes in its mailings. If a customer places an order upon receiving the catalog, he/she will use the direct reply envelope to mail it back, and it costs the company extra Rs 50 in postage for each direct mail envelope used by a respondent. If a customer does not place an order, the direct reply envelope will not be used, and no extra cost is incurred for the company. The average value of a customer order is Rs7000, and the company's variable cost per order averages around 75% of the order's value. The company plans to mail 400,000 catalogs, and it expects the response rate (percentage of customers that mails back an order) to be at 8%. It wants to develop a spreadsheet model to analyze its profit.

Step by Step Solution

3.52 Rating (165 Votes )

There are 3 Steps involved in it

Step: 1

ANSWER To analyze Zeens profit we need to calculate its revenue and costs Revenue The revenue for Ze... 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

Financial Accounting A User Perspective

Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry

6th Canadian Edition

470676604, 978-0470676608

More Books

Students also viewed these Finance questions

Question

What is dynamic pricing, and why might this be risky?

Answered: 1 week ago

Question

2. Follow through with fair consequences.

Answered: 1 week ago