Question

KEY facts :

100 retail price-per unit-

50 sell price to the retailer -per unit-

25 cost to manufacturer - per unit-

12 million IMC advertising Budget

Question1- What is the profit per unit for the manufacturer?

question 2- what is the profit margin % per unit for the manufacturer?

Question 3- where are your profits $'s at the end of year 1?

a) estimate that you will sell 533,000 units in 2019 as result of your IMC campaign

b)Mutiply that # times the profit margin per unit

question 4- What is your ROi%?

question 5- was this worth the 12,000.000 investment ?

USE 3 reasons to support your reccomendation to senior management and finance ?

Answer 1

Total cost per unit to manufacturer = $ 25

Selling price per unit of manufacturer = $ 50

(1) Computation of the profit per unit for the manufacturer.We have,

Profit per unit = Selling price - Total cost

Profit per unit = 50 - 25 = $ 25.00

(2) Computation of the profit margin for the manufacturer.We have,

Profit margin = Profit per unit / Selling price per unit

Profit margin = 25 / 50 = 0.500*100 = 50 %

Hence, the profit margin for the manufacturer is 50 %.

(3) Computation of the profit at the end of year 1.We have,

Total unit of sale		533,000 units
Total profit	533,000 x 25.00	13,325,000
Less: IMC advertising cost		12,000,000
Total profit at the end of year 1		$ 1,325,000

(4) Computation of the return on investment(ROI).We have,

ROI = Net profit for the year / Total investment

ROI = 1,325,000 / 12,000,000 = 0.1104*100 = 11.04 %

Hence,the return on investment (ROI) is 11.04%.

(5) The main goal of IMC advertising is  increasing brand awareness, generating sales and reinforcing repeat purchases.Due to the IMC advertising,number of units sold in 2019 goes to 533,000 units.Therefore, IMC advertising cost $ 12,000,000 was worth for the company.