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Midterm Metrics: Quiz 1: 1. Dexter an artist draws caricatures on the waterfront pier. It costs him approx.. $5 in materials for each caricature he makes. He sells each caricature for $20. Calculate the contribution margin per unit and the contribution margin percent. He sells 25 drawings ($15 and 75%) 2. Designer jeans are sold at the retailer for $425.00. The Manufacturer sells them for $97.00 to the importer. It costs the manufacture $55.00 to produce the jeans. The importer sells the dress for $199.00 to the Wholesaler who then sells them for $250.00 to the retailer. Calculate the Margin $ and Margin % for the retailer in the distribution channel? ($175 and 41%) 3. You are working for a watch manufacturer and after designing the new model, you realize that your costs will be $45.13. Your company typically sells its products at 55% markup. What is the mandatory selling price? ($69.95) 4. You produce 2 sets of headphones: a base model and a premium model. Last month, you sold 510,000 units of the base model for $25, with production costs of $19. During that same time, you sold 174,500 premium models for $75, with production costs of $48. What was your overall average unit margin, in $? ($11.36) 5. Your company sells barbecues for $650, after a 35% margin. What are your costs? ($422.50) 6. A flower shop sells its bouquets for $29.95, providing a 27% margin. They purchase the flowers from a distributor, who takes a 20% margin. The distributor buys the various flowers from different growers, who typically take a 30% margin. What is the cost for the grower to produce enough flowers for one bouquet? (12.24) 7. The distributor sells the product for $100, after taking a 20% mark-up. She bought the product from a wholesaler who added a 25% mark-up. The manufacturer sold the product with a 15% mark-up. What is the manufacturer’s cost? ($57.97) 8. You are the owner of an exclusive nightclub holding a New Year's Eve party. You have determined that you need a minimum contribution margin of 40%. You know that the food cost is $20 per person and the beverage cost is $17 per person and the house band charges a fee of $5 per person. You estimate 850 tickets will be sold. What is the Total Revenue? ($59,500)

9. P&G wants to sell a new air refresher. It costs $1.50 to manufacture. P&G

Mark-Ups are 25%. It will then be sold to a wholesaler who earns a 10% Mark-Up and then the retailer who earns a 25% Mark-Up. Calculate the final Retail Price? ($2.58) 10. It costs you $3 to manufacture your product, and you sell it for $7.50. What is your mark-up? (150%) 11. A bike shop uses a markup rate of 35%. If the retailer pays $125 each for a certain brand of bicycle, how much does it sell for? ($168.75) 12. A local restaurant sells a prix fixe meal for $32.95, with a cost of goods sold of $17.34. What is the restaurant's margin %age for each meal sold? (47.4%) 13. A Thai Restaurant sells lunch for $15. The food cost used in producing each set lunch is $5. Additional variable costs like packaging are $3 per lunch. What is the total contribution and contribution margin percent? They sell 150 lunches. ($1050 and 46.6%) 14. Your company offers a service to customers at a rate of $125 per hour, after a mark-up of 45%. What are your costs for each hour of service? ($86.21) 15. Your company can acquire all of the necessary components and labour to build your product for $50. Your boss has stated that everything will be sold with a 30% mark-up. What price should you set for the product? ($65) 16. A Retailer wants to earn a 80% Margin on gold rings The rings cost $475. What is the Retail Price and Retail Margin$? ($2375 & $1900) 17. Assume you can buy the materials to make personalized jewelry for $8.92 per unit, and sell the jewelry for a 54% markup. What is your margin on the jewelry? (35.1%) 18. A pair a designer jean is sold by the retailer for $225.00. The Manufacturer sells them for $27.00 to the importer. It costs the manufacturer $8.00 to produce the jeans. The Importer sells the jeans for $50.00 to the Wholesaler who then sells them for $100.00 to the Retailer. Calculate the Margin $ &% for the manufacturer in the distribution channel? ($19 and 70.37% NOC) 19. A Thai Restaurant sells lunch for $12. The food cost of sales used in producing each set lunch is $5. Additional variable costs are $3 per lunch. What is the contribution margin expressed in dollars and percent? They sell 150 lunches. ($4 and 33%) 20. Your company sells their product for $1,500, after a mark-up of 150%. What does it cost the company to manufacture that product? ($600)

21. Your company can acquire all of the necessary components and labour to build your product for $20. Your boss has stated that everything will be sold with a 40% mark-up. What price should you set for the product? ($28) 22. It costs you $3 to manufacture your product, and you sell it for $7.50. What is your margin? ($4.50) 23. You are the manufacturer. It costs you $25 to manufacture your product, you sell it to a distributor with a 15% margin. The distributor sells it to a retailer with a 15% margin. What is the distributor’s price? ($34.60) 24. P&G sells a new improved laundry detergent. It costs $2.79 to Manufacture. P&G Mark-Ups are 25%. It will then be sold to a wholesaler who earns a 10% Mark-Up and then the retailer who earns a 25% Mark-Up. Calculate the final Retail Price? ($4.80) 25. You are the manufacturer. It costs you $10 to manufacture your product, you sell it to a distributor with a 20% mark-up. The distributor sells it to a retailer with a 25% mark-up. What is the retailer’s cost? ($15) 26. After careful consideration, you decide to sell your services with a 25% margin. The customer pays you $140. How much are your costs? ($105) 27. Calculate the contribution margin in $ and as a % Using the following information: Total Revenue $50,000 Variable costs $40 and $5. Units sold 1,000 ($5 and 10%) 28. You are an online retailer of Blu-rays, promoting sales via a 'no postage and packaging' offer. You purchase your Blu-rays from movie producers for $18.75. Packaging and a padded envelope cost $1.00 per Blu-ray; and postage is $2.00. If you sell the Blu-rays for $25 What is the contribution margin expressed in dollars and percent? The online retailer sold 150 Blu-rays (43.25 and 13%) 29. You are operating a clothing business using a hybrid channel structure: you sell some clothing via a retailer and some through your online store. Last month, you sold 325 pairs of jeans through the retailer with a 22% margin, and 150 online with a 29% margin. What was your average channel margin? (24.2) 30. It costs you $35 an hour to pay your employee, and you want to make a margin of 41.67% on her labour. What hourly price should you charge customers for her service? ($60) 31. You are the manufacturer. It costs you $10 to manufacture your product, you sell it to a distributor with a 20% margin. The distributor sells it to a retailer

with a 30% margin. What is the retailer’s cost? ($17.86) 32. Your company offers three levels of car wash services: silver, gold and platinum. Last week, you sold 289 silver carwashes at $9.95 each, 127 gold carwashes at $12.95 each, and 42 platinum car washes at $15.95 each. What was your overall average price per service sold? ($11.34)

Quiz 2:

1. You are running a business that sells office supplies. Your monthly lease on the space is $3600. This past week, you sold 820 rulers for $1.25 each (they cost you $0.25 each), 900 reams of paper at for $7.99 per ream (they cost you $4 each), 172 computers at an average price of $674.99 (your cost: $497), and 86 printers at an average price of $109.95 (your cost: $89). Over the course of this week, you paid 4 part-time employees $8 per hour, and they each worked 20 hours. You also pay a full-time manager, who is on salary, $41,600 per annum. As it was back-to-school time, you ran a special flyer that cost you $1700 to print and deliver. Your electricity bill averages out to $758.33 per month, and you also employ the services of an accountant four times a year to manage books and do taxes, at a cost of $5400 per year. Assuming no taxes come into play, what is your net income for the week? ($32,577.33) 2. Aspect Plumbing Total Revenue $17,898 Cost of Goods Sold $9,145 Operating Expenses $3,954 Interest Expenses $21 Taxes $887 Best-of-the-Best Plumbing Total Revenue $14,396 Cost of Goods Sold $8,762 Operating Expenses $1,893 Interest Expenses $23 Taxes $505 Centretown Plumbing Total Revenue $16,492 Cost of Goods Sold $8,752 Operating Expenses $3,210 Interest Expenses $18 Taxes $823 Divine Plumbing Total Revenue $12,876 Cost of Goods Sold $7,422 Operating Expenses $1,676 Interest Expenses $9 Taxes $482 For the above 4 companies, who has the highest profit margin? (Divine Plumbing) 3. You are running a business that sells office supplies. Your monthly lease on the space is $3600. This past week, you sold 820 rulers for $1.25 each (they cost you $0.25 each), 900 reams of paper at for $7.99 per ream (they cost you $4 each), 172 computers at an average price of $674.99 (your cost: $497), and 86 printers at an average price of $109.95 (your cost: $89). Over the course of this week, you paid 4 part-time employees $8 per hour, and they each worked 20 hours. You also pay a full-time manager, who is on salary, $41,600 per annum. As it was back-to-school time, you ran a special flyer that cost you $1700 to print and deliver. Your electricity bill averages out to $758.33 per month, and you also employ the services of an accountant four times a year to manage books and do taxes, at a cost of $5400 per year. What are your total fixed costs for the week? ($4249.62) 4. You are running a business that sells office supplies. Your monthly lease on the space is $3600. This past week, you sold 820 rulers for $1.25 each (they cost you $0.25 each), 900 reams of paper at for $7.99 per ream (they cost you $4 each), 172 computers at an average price of $674.99 (your cost: $497), and 86 printers at an average price of $109.95 (your cost: $89). Over the course of this week, you paid 4 part-time employees $8 per hour, and they each worked 20 hours. You also pay a full-time manager, who is on salary, $41,600 per annum. As it was back-to-school time, you ran a special flyer that cost you $1700 to print and deliver. Your electricity bill averages out to $758.33 per month, and you also employ the services of an

accountant four times a year to manage books and do taxes, at a cost of $5400 per year. What are your total variable costs for the week? ($96,943) 5. Beltway Industrial had revenues of $13,539,025 in 2013. They sold 234,442 Custom Tuning kits through Canadian Tire. Their fixed costs were $4,175,683.25, and their contribution margin was 36%. What is their Net profit margin? (5.2%) 6. Fashion Pro currently manufactures their novelty t-shirts for a contribution margin of 70%. With a sales revenue of $750,000, their fixed costs are 42% of their sales. They have signed with a new company that can produce their shirts allowing them to increase their contribution margin to 75%. How will this change their net profit margin, assuming the sales revenue does not change? (Increase from 28% to 33%) 7. A marketing manager for P&G developed a direct mail marketing campaign to increase sales of Air Fresheners. The following are the costs associated with the campaign. The prospect list cost $20,000, creative costs $10,000, total mailing costs were 60,000, each air freshener cost 75 cents. Included in each direct mail piece was a coupon for 49 cents off the retail price of the Air Freshener. The Air Freshener retails for $6.99 without the coupon. Half of the net retail price goes to channel partners the other half to P&G. P&G would like to earn a profit of $20,000 on the campaign. How many customers must purchase an air Freshener for P&G to reach the Target Volume? Assume all customers use the coupon. Remember the coupon is deducted from the retail price before you allocate margin. (13,846) 8. Calculate the monthly Target Volume for the following: The farmer has monthly costs consisting of $500 in real estate taxes, $1200 interest on a bank loan, and $800 in other fixed expenses. He would like to earn a 20% profit margin on his monthly fixed Costs. The variable cost per bushel is $2.50, and covers labour, corn seed, herbicides and pesticides. The price per bushel is $4.50. (1500) 9. The owner of a small restaurant that sells take-out fried chicken and biscuits pays $2,500 in rent each month, $500 in utilities, $250 interest on his loan, insurance premium of $200, and advertising on local buses $250 a month. A bucket of take-out chicken is priced at $9.50. Unit variable costs for the bucket of chicken are $5.50. The owner would like to generate $500 in Profit each month. How many small buckets of chicken does the restaurant need to sell to reach the Target Volume? (1,050 buckets) 10. Bata Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per pair. Suppose a consultant tells Ace it can sell 700,000 heel repair kits, what price must it charge to Break-even?

($13.57) 11. Ace Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per pair. Suppose a consultant tells Ace it can sell 700,000 heel repair kits, what price must it charge to achieve a profit of $2.5 million? ($17.14) 12. Calculate the Break-even in units for the following: The farmer has costs consisting of $500 in real estate taxes, $700 interest on a bank loan, and $800 in other fixed expenses. The variable cost per bushel is $1, and covers labour, corn seed, herbicides and pesticides. The price per bushel is $3. (1000) 13. Calculate the monthly Target Volume for the following: A Flower shop owner has monthly costs consisting of $500 in real estate taxes, $1200 interest on a bank loan, and $1800 in other fixed expenses. She would like to earn a $1000 profit each month. She sells her flowers for $25. The variable costs are $5 for materials, $2 for labour and $3 for delivery. (300) 14. The owner of a small restaurant that sells take-out fried chicken and biscuits pays $2,500 in rent each month, $500 in utilities, $750 interest on his loan, insurance premium of $200, and advertising on local buses $250 a month. A bucket of take-out chicken is priced at $9.50. Unit variable costs for the bucket of chicken are $5.50. How many small buckets of chicken does the restaurant need to sell to break-even? (1,050 buckets)

15. Calculate the monthly Breakeven colume for the following: A Flower shop owner has monthly costs consisting of $500 in real estate taxes, $1200 interest on a bank loan, and $1800 in other fixed expenses. She would like to earn a $1000 profit each month. She sells her flowers for $25. The variable costs are $5 for materials, $2 for labour and $3 for delivery. (234) 16. You are considering two marketing campaigns. You know from experience that the first option will generate approximately $45,000 in additional revenue at a cost of $7,500, with a contribution margin of 25%. A colleague recently suggested an alternative campaign that would likely generate a 60% ROMI, generating $62,500 in additional revenue, but costing $12,500. What would the contribution margin need to be in order to make this alternative viable? (32%)

17. You are considering two marketing campaigns. You believe that Campaign 1 would generate incremental revenues of $75,000, at an incremental cost of $8,500 and a contribution margin of 30%. You predict that Campaign 2 would generate

incremental revenues of $95,000, at an incremental cost of $11,000 and a contribution margin of 27%. If you are basing your decision solely on ROMI, which campaign should you choose? (Campaign 1) 18. You are trying to determine the efficiency of one of your key competitors. Based on the financial statements, you note that they had a net income in 2013 of $48,600,000. They have 985,000 outstanding shares, and they paid a dividend of $1.35 per share. Their long-term debt was $67,480,000 for 2013, and their shareholder's equity amounted to $24.76 per share. What was their ROIC? (51.45%) 19. You are managing a hotel in Toronto, with 300 rooms. Over a given month, you currently average 60% occupancy per day (i.e., on average, 60% of the rooms are rented), and people pay $139 per night. Your main variable cost is room cleaning – it costs, on average, $15 per room cleaning, but you only need to clean rooms that are rented. You believe that by renovating the entire hotel, you could increase the average occupancy rate to 72% and charge more for the room: $189 per night. However, you would drop to 280 rooms and the planned renovations would require additional cleaning services, raising the cost to $22 per room. The total cost would of the renovations are estimated at $3,360,000. What would the ROMI be on this investment, assuming a one-year implementation? (9.6%) 20. You are considering a BOGO (buy one, get one) campaign on Thanksgiving day where, if people buy a pair of shoes for $200.00, they get a second pair for free. Your cost for the shoes is $50.00 per pair. It will cost you $2,500 to advertise the campaign, and you will need to bring in 4 extra staff, at a cost of $250 per day, to cover the estimated extra business. Your company requires a minimum 40% ROMI for any campaign. How much additional Revenue will you need to generate in order to justify this BOGO offer? ($9,800) 21. Assume that you are not planning to pay out dividends in the coming year. You want to maintain an ROIC of 16%, and you have outstanding debts of $56,000,000 and shareholder equity of $75,000,000. You know that your total expenses for the coming year, excluding variable costs, will be $42,500,000. What must your gross profit be in order to meet this ROIC? ($63,460,000)

Quiz 3:

1. A marketing manager for P&G wants to calculate the North American Value of the Gillette bran in 2012 using th Brand Z Method. P&G’s net earnings in 2012 are $10,756. He attributes 10% earnings to the Gillette Brand in 2012. The brand multiplier is 12 times for Fabric and home care products, 16 times for grooming products and 8 times for pet and health care products. The estimated brand contribution from 2010-2014 for Beauty products is 80%, Grooming products 80%, Health Care products 75%, Fabric and Home products 60% and Pet food products 50% Calculate the NA Value of Gillette brand for grooming products in 2012 using the Bran d Z method. NA sales represent 39% of total sales (5,369.4 Million) 2. A marketing manager for P&G North America wants to calculate the Moran Brand Equity index for the Tide brand. Tide sales originate from three Geographic segments. 10% of sales are in Canada with a 60% share of the market, 80% of sales are in the United States with a 75% share of the market, and 10% of sales are in Mexico with a 40% share of the market. The average price of tide in all 3 geographic segments is $5.00 compared to average of $4.00 for comparable brands. 80% of all customers intend to repurchase Tide next year. Calculate the Brand Equity Index (Moran) for Tide (0.7) 3. A marketing manager for P&G wants to calculate the Worldwide Value of the Gillette bran in 2012 using th Brand Z Method. P&G’s net earnings in 2012 are $10,756. He attributes 10% of corporate earnings to the Gillette Brand in 2012. The brand Multiplier is 12 times for Fabric and home care products, 16 times for grooming products and 8 times for pet and health care products. The estimated brand contribution from 2010-2014 for Beauty products is 80%, Grooming products 80%, Health Care products 75%, Fabric and Home products 60% and Pet food products 50% Calculate the Worldwide Brand Value of Gillette for grooming products in2012 using the Brand Z method. ($13,767.7 Million) 4. A marketing manager for P&G North America wants to calculate the

Moran Brand Equity index for the Iams Pet Food brand. Sales originate from three Geographic segments. 10% of sales are in Canada with a 25% share of the market, 80% of sales are in the United States with a 30% share of the market, and 10% of sales are

in Mexico with...