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Marketing Performance Evaluation 13) Foamstar Ltd, a company selling a washing machine, has estimated the market capacity

as 50, 000 units a year, divided evenly over five sales area-East, South, North and Centre. The Managing Director has set a sales objective of between 50% and 80% of this potential. The sales force is divided into five equal areas and the objective is expected to be achieved by using salesmen in the following manner. Number of salesmen used/area Market share expected % 5 50 6 58 7 65 8 71 9 76 10 78 11 80 All the products are manufactured at one location at ex-factory cost of 8,400 each and are sold at a standardized price of Rs.10,000 each. The transportation and installation costs varies in relation to the distance from the factory as follows: Sales Area Variable transportation/Installation cost/unit East 1,000 West 900 South 800 North 750 Centre 700 35 Salesmen will be employed at an average cost of Rs.1,00,000 per anum each. The Marketing Director indicated that even with additional salesmen increase beyond 6500 per area would be difficult unless additional expenditure are incurred in advertising and sales incentives as below: Sales Per Area Additional Expenditure 6501-7000 Rs.10,000 for every 100 units sold beyond 6500 7001-7500 Rs.50,000 plus 15,000 for every 100 units sold beyond 7000 7501-8000 Rs.1,25,000 plus Rs.20,000 for every 100 units Sold beyond 7500 units Given that there must be at least five salesmen in each areas, you are required to do the following: a) Calculate the highest total contribution possible using 35 salesmen. b) Advise whether increasing the sales force would improve the total contribution.

14) Ambika Condiments bring about 2 productsSuchi & Ruchi which are popular in market. The management has the option to alter the sales-mix of the 2 products from out of the following combinations Option Suchi(Units) Ruchi(Units) I 800 600 II 1,600 III 1,300 IV 1,100 500 The per unit production cost/sales data are : Suchi(Rs.) Ruchi(Rs.) Direct Material 25 30 Direct Labour 20 24 Selling Price 75 90 Variable O/H 100% of Direct Labour, Common Fixed Overhead for both Products Rs. 10000. You are required to 1) Prepare a marginal cost statement for the two products 2) Evaluate the options and identify the most profitable sales mix. 15) Dream Works Ltd manufactures a standard product, the marginal cost(per unit) of which are as follows: Direct Material Rs.160 Direct Wages Rs.120 Variable Overheads Rs.20 Total Rs.300 Its Annual Budget includes the following: Output 40,000 units. Fixed Overheads: Production Rs.80,00,000 Administration Rs.48,00,000 Marketing Rs.40,00,000 Total Rs.1,68,00,000 Contribution Rs.2,00,00,000 Recently, the top management of the organization has started thinking in terms of revising its budget and some alternatives in the form of proposals(stated below) were discussed in the last board meeting Proposal 1 The organization expects a profit of Rs.48,00,000 and wants to know the selling price to be quoted for the purpose. It is estimated that a) an increase in advertising expenditure of Rs.9,44,000 would result in 10% increase in sales and b) Fixed production overheads and marketing overheads would increase by Rs.2,00,000 & Rs.1,36,000 respectively. Proposal 2 The organization expects that, with an additional advertising expenditure sales would go up by 20% and a profit margin of 15% would be obtained. Under the circumstances, fixed overheads and marketing are expected to increase by Rs.3,20,000 & Rs.2,00,000 respectively. The organization wants to know the additional expenditure on advertisement required with a view to achieving the result. You are required to draw up forecast statements for each of these alternatives and determine the selling price per unit.