This document provides calculations and analysis related to marketing and management. It includes topics such as retail price calculation, contribution margin, breakeven analysis, market potential estimation, sales volume calculation, mark up profit calculation, price elasticity calculation, total profit calculation, and selection of proposal.
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Running Head: Marketing and Management 1 Project Report:Marketing and Management
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Marketing and Management 2 Que 1: Calculation of retail price Unit cost$ 140.00 Margin (as it is based on selling price) (140*100/70)30% Retailer price$ 200.00 Retailer margin (as it is based on selling price) (200*100/60)40% Retail price$ 333.33 Que 2: Selling price$20.00 Margin on selling price40% Advanced cost: DVD package and disc2.2 Royalties2.25 Advertising and promotion$500,000.00 Overhead$200,000.00 a) Calculation of contribution margin per unit Total selling price$20.00 Less: variable cost$4.45 Contribution margin per unit (Selling price - variable cost)$15.55 Contribution margin (Contribution margin per unit / sales price)77.75% b) Cost-Volume-Profit Relationships - Breakeven Per Unit Amounts Selling price$20.00 Variable costs$4.45 Contribution margin (Selling price - variable cost)$15.55
Marketing and Management 3 Total fixed costs$700,000.00 Breakeven in units (Total fixed cost / contribution margin)45016.08 Breakeven in dollars (breakeven in units * selling price)$900,321.54 c) D) Calculation of sales unit on the basis of desired profit Per unit Selling price$20.00 Variable costs$4.45 Contribution margin (Selling price - variable cost)$15.55 Total fixed costs$700,000.00 Breakeven in units (Total fixed cost / contribution margin)45016.08 Breakeven in dollars (breakeven in units * selling price)$900,321.54 Desired Profit$300,000.00 Sales units to achieve the desired profit (Desired profit / contribution) + Breakeven sales units)64308.68 Sales dollar to achieve the desired profit ((Desired profit / contribution) + break even sales )* selling price$1,286,173.63 (Drury, 2013) d) Calculation of net profit Sales$100,000,000 Less: cost of goods manufactured$22,250,000 Gross profit$77,750,000 Administration cost: Advertising and promotion$500,000 Overhead$200,000 Net profit$77,050,000
Marketing and Management 4 Que 3: a) Calculation of market potential for HD TV Number of US household (million)113 Ownership and internet access60%67.8 Willing household30%33.9 Out of which market which is planned to be capture (million household)1.36 b) Calculation of sales volume for first year Household captured in first year1.36 (million household) Average TV set per household1 Sales volume for first year1.356units Que 4: Prospective buyer20million Average sales unit per buyer2 Selling price$50 Desired market share10% Lease$400,000 Variable cost$30 a) Calculation of sales units on the basis of desired market share Prospective buyer (million)20 Market share10% Captured prospective buyer (million)2 Average sales unit per buyer2 Total sales unit (million)4
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Marketing and Management 5 b) Calculation of market share which should be captured Per Unit Amounts Selling price$50.00 Variable costs$30.00 Contribution margin (Selling price - variable cost)$20.00 Total fixed costs$400,000.00 Breakeven in units (Total fixed cost / contribution margin)20000.00 Total prospective buyer10000 Total % market0.50% (Horngren, 2009) Que 5: a) Calculation of contribution Per Unit Amounts Selling price$10.00 Variable costs$5.00 Contribution margin (Selling price - variable cost)$5.00 b) Cost-Volume-Profit Relationships - Breakeven Per Unit Amounts Selling price$10.00 Variable costs$5.00 Contribution margin (Selling price - variable cost)$5.00 Total fixed costs$50,000.00 Breakeven in units (Total fixed cost / contribution margin)10000.00 Breakeven in dollars (breakeven in units * selling price)$100,000.00
Marketing and Management 6 c) d) Calculation of Mark up cost Per unitTotal Selling price$10.00$ 250,000.00 Less: Variable cost$5.00$ 125,000.00 Contribution (Sales - variable cost)$5.00$ 125,000.00 Fixed cost per unit$2.00$50,000.00 Mark up on sales price$3.00 Mark up on total cost$75,000.00 d) Calculation of price elasticity Change in price (a)5 Change in quantity (b)-10000 Original quantity (c)25000 Original price (d)10 Price elasticity (a/b)*(c/d)-1.25 (Bowles, 2009) e) d) Calculation of Mark up profit % on sales price Per unit Selling price$15.00 Less: Variable cost$5.00 Contribution (Sales - variable cost)$10.00 Fixed cost per unit$3.33 Mark up on sales price$6.67 Mark up %44.44%
Marketing and Management 7 (Brigham and Houston, 2012) f) Calculation of Mark up profit % on cost price Per unit Selling price$15.00 Less: Variable cost$5.00 Contribution (Sales - variable cost)$10.00 Fixed cost per unit$3.33 Mark up on sales price$6.67 Mark up %80.07% g) Calculation of total profit Total sales$225,000.0 Less: variable cost$75,000.0 Fixed cost$50,000.0 Net profit$100,000.0 Net profit per unit$6.67 h) Since, the earlier profit of the company was $ 75,000 and after making the changes into sales unit and sales price, profit of the company would become $ 1,00,000. It depicts about the better increment and hence, the change is for betterment of the company. Que 6: a)
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Marketing and Management 8 Calculation of Mark up profit % on sales price Per unit Selling price$ 200,000.00 Less: Variable cost$ 100,000.00 Contribution (Sales - variable cost)$ 100,000.00 Fixed cost per unit$8,000.00 Mark up on sales price$92,000.00 Mark up %46.00% Calculation of Mark up profit % on cost price Per unit Selling price$ 200,000.00 Less: Variable cost$ 100,000.00 Contribution (Sales - variable cost)$ 100,000.00 Fixed cost per unit$8,000.00 Mark up on sales price$92,000.00 Mark up %85.19% b) Calculation of demand units Price elasticity2 Change in selling price-2 Original quantity20000 Original price5 Change in demand-4000 Demand units24000 (Frank, 2008) c) d) Calculation of Mark up profit % on sales price Per unit Selling price$ 192,000.00
Marketing and Management 9 Less: Variable cost$ 120,000.00 Contribution (Sales - variable cost)$72,000.00 Fixed cost per unit$8,000.00 Mark up on sales price$64,000.00 Mark up %33.33% d) Calculation of Mark up profit % on cost price Per unit Selling price$ 192,000.00 Less: Variable cost$ 120,000.00 Contribution (Sales - variable cost)$72,000.00 Fixed cost per unit$8,000.00 Mark up on sales price$64,000.00 Mark up %50.00% d) Calculation of total profit Total sales$192,000.0 Less: variable cost$120,000.0 Fixed cost$8,000.0 Net profit$64,000.0 Net profit per unit$2.67 Que 7: a) Calculation of sales unit on the basis of desired profit Per unit Selling price$10.00
Marketing and Management 10 Variable costs$6.00 Contribution margin (Selling price - variable cost)$4.00 Total fixed costs$100,000.00 Breakeven in units (Total fixed cost / contribution margin)25000.00 Breakeven in dollars (breakeven in units * selling price)$250,000.00 Desired Profit$ 120,000.00 Sales units to achieve the desired profit (Desired profit / contribution) + Breakeven sales units)55000.00 b) Calculation of sales unit on the basis of desired profit Per unit Selling price$13.00 Variable costs$8.00 Contribution margin (Selling price - variable cost)$5.00 Total fixed costs$80,000.00 Breakeven in units (Total fixed cost / contribution margin)16000.00 Breakeven in dollars (breakeven in units * selling price)$208,000.00 Desired Profit$ 120,000.00 Sales units to achieve the desired profit (Desired profit / contribution) + Breakeven sales units)40000.00 On the basis of calculation in a point and b point, it has been found that 15000 units would be sold less if the changes would be done c) Calculation of Mark up profit % on sales price Per unit Selling price$ 520,000.00 Less: Variable cost$ 320,000.00
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Marketing and Management 11 Contribution (Sales - variable cost)$ 200,000.00 Fixed cost per unit$80,000.00 Mark up on sales price$ 120,000.00 Mark up %23.08% Calculation of Mark up profit % on cost price Per unit Selling price$ 520,000.00 Less: Variable cost$ 320,000.00 Contribution (Sales - variable cost)$ 200,000.00 Fixed cost per unit$80,000.00 Mark up on sales price$ 120,000.00 Mark up %30.00% (Shapiro, 2008) Que 8: a) Estimation of demand of pizza in first year Total families in the area20000 Vegetarian families4000 Expected customers16000 Market which can be captured1600 average pizza consumption per family10 Average pizza consumption per year16000 b) d) Calculation of Mark up profit % on sales price Per unit Selling price$8.00 Less: Variable cost$6.00
Marketing and Management 12 Contribution (Sales - variable cost)$2.00 Fixed cost per unit$- Mark up on sales price$2.00 Mark up %25.00% d) Calculation of Mark up profit % on cost price Per unit Selling price$8.00 Less: Variable cost$6.00 Contribution (Sales - variable cost) $2.00 Fixed cost per unit$- Mark up on sales price$2.00 Mark up %33.33% c) Calculation of demand units Price elasticity0.5 Change in selling price2 Original quantity16000 Original price8 Change in demand8000 Demand units24000 Que 9: Selection of proposal Company ACompany C Fixture cost$35,000$55,000 Insurance cost$9,000$12,000 Electricity charges$162,000$108,000 Maintenance$14,000$18,000
Marketing and Management 13 charges Supply cost$27,000$30,000 Labour rate$9,000$15,000 Total cost$256,000$238,000 Above table indicates that the total cost of company A and company B would be $ 2,56,000 and $ 2,38,000 respectively. Hence, it is recommended to the company to accept the proposal of company C because of lesser cost (Higgins, 2012). Que 10: Statement of profit and loss a/c (Amt in millions) Sales$20.00 Less: Cost of goods sold$8.00 Gross profit$12.00 Less: Marketing expenses Sales salaries$3.00 Sales commission$1.00 Advertising cost$3.00 Freight cost$2.00$9.00 Other cost$5.00 Net profit-$2.00 Cost-Volume-Profit Relationships - Breakeven Per Unit Amounts Selling price$20.00 Variable costs$11.00 Contribution margin (Selling price - variable cost)$9.00 Total fixed costs$11.00 Breakeven in units (Total fixed cost / contribution margin)1.22 Breakeven in dollars (breakeven in units * selling price)$24.44
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