Answer:
Selling price = $ 15
Variable cost = $ 5
Sales per week = 1000 units
Price promotion = 20%
New selling price after price promotion = 15*(1-.2) = $ 12
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1)
Total profit before price promotion = 1000*(15-5) = $ 10,000 per week
New profit contribution per unit, after price promotion = 12-5 = $ 7
Sales required = Total profit before price promotion / New profit contribution per unit
= 10000 / 7
= 1429 units
Increase in sales required = 1429 - 1000
= 429 units (over and above the existing sales of 1000 units)
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2)
Total sales required = (profit before price promotion + Advertising expense) / New profit per unit
= (10000+400)/7
= 1486 units
Total Increase in sales required = 1486 - 1000
= 486 units (over and above the existing sales of 1000 units)
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3)
New profit per unit = 7+1 = $ 8
Total sales required = (profit before price promotion + Advertising expense) / New profit per unit
= (10000+400)/8
= 1300 units
Increase in sales required = 1300 - 1000
= 300 units
Explanation:
