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Canastar Group sells three lines of prepared foods into a marketplace

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Canastar Group sells three lines of prepared foods into a marketplace where total demand is 240 million cases. Canastar?s market share is 2 ? percent, the average selling price per case is $30 and their variable costs per case are $23. Canastar spends $15 million on marketing and sales expenses. Other operational expenses add up to $6 million. The lemonade mix and the corndogs are both positive in terms of net profit before taxes, with lemonade contributing the greater share. Canastar?s cheese line produces a net negative profit. Last year, the Group?s internally-produced accounting information system was voted best in the food industry for its ability to track inventory and accurately predict cost variations.;1. What is Canastar Group?s marketing return on sales (ROS)? Show your work. (20 points);a) 10.6%;b) 12%;c) 15%;d) 140%;e) 180%;2. If Canastar Group lowered its prices by 10% and spent an additional $5 million on marketing, causing a boost in market share to 4%, what would the approximate net marketing contribution be? Show your work. (20 points);a) $12.4 million;b) $13.6 million;c) $15 million;d) $18.8 million;e) $21 million

 

Paper#34790 | Written in 18-Jul-2015

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