Question

Within a given distribution channel, the following information is available concerning trade margins and costs. A wholesaler has a unit selling price of $839 and a unit cost of $498. The retailer requires a 52% markup on selling price. The manufacturer has unit variable costs of $304. Calculate the manufacturer's percent markup on cost. Report your answer as a percentage and round to the nearest percent.

A manufacturer is considering a switch from manufacturers’ representatives to an internal sales force. The following cost estimates are available. Manufacturers’ reps are paid 7.6% commission and incur $635,000 in fixed costs, while an internal sales force has fixed costs projected at $1,770,000 and would receive 2.7% commission. At what sales volume would the manufacturer be indifferent between the two alternatives? Report your answer in dollars.

A manufacturer is considering a switch from manufacturers’ representatives to an internal sales force. The following cost estimates are available. Manufacturers’ reps are paid 8.0% commission and incur $580,000 in fixed costs, while an internal sales force has fixed costs projected at $1,840,000 and would receive 2.8% commission. Assume that sales revenue is double the breakeven volume or the point at which the manufacturer would be indifference between reps and an internal sales force. At this volume, how much would the manufacturer save, assuming the company had switched to an internal sales force? Report your answer in dollars.

Answer 1