Synergyica, Inc. is a manufacturer & marketer of gas lamps for utilization in mining & natural...
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Synergyica, Inc. is a manufacturer & marketer of gas lamps for utilization in mining & natural resources operations. Total industry sales in this relevant market were $100 Million, with Synergyica's market share representing 5%. Synergyica's contribution margin has steadily been 25%. Synergvica's salesforce calls on their widespread distributor network to generate revenue. These distributors in turn sell the products to the industrial customers. Distributors generate on average revenue of $10,000 per outlet for Synergvica. Each sales rep earns $50,000 per year. Synergvica has a corporate advertising & promotions campaign worth $640,000 which has managed to effectively maintain their brand awareness & image in the resources industry. (a). Compute Synergvica's sales revenue. (b). Synergvica wants to increase their advertising budget by $200,000 to highlight their green initiatives and bolster brand presence further in the industry. This cost needs to be expensed. → What increase in dollar sales revenue would be needed to recoup this incremental advertising expenditure? - What increase in Synergvica's overall market share does this call for? (c). Synergvica is seeking to hire 2 more sales reps to expand further territories in their network by gaining access to additional distributors. Their cost becomes relevant and must be expensed. - How many new distributors would be required to cover the cost of hiring these 2 new sales reps? (d). Synergyica is considering a 10% reduction in the price of its offerings. - What absolute increase in its sales revenue would be needed to maintain the present line contribution (i.e., the present level of total contribution dollars)? Synergyica, Inc. is a manufacturer & marketer of gas lamps for utilization in mining & natural resources operations. Total industry sales in this relevant market were $100 Million, with Synergyica's market share representing 5%. Synergyica's contribution margin has steadily been 25%. Synergvica's salesforce calls on their widespread distributor network to generate revenue. These distributors in turn sell the products to the industrial customers. Distributors generate on average revenue of $10,000 per outlet for Synergvica. Each sales rep earns $50,000 per year. Synergvica has a corporate advertising & promotions campaign worth $640,000 which has managed to effectively maintain their brand awareness & image in the resources industry. (a). Compute Synergvica's sales revenue. (b). Synergvica wants to increase their advertising budget by $200,000 to highlight their green initiatives and bolster brand presence further in the industry. This cost needs to be expensed. → What increase in dollar sales revenue would be needed to recoup this incremental advertising expenditure? - What increase in Synergvica's overall market share does this call for? (c). Synergvica is seeking to hire 2 more sales reps to expand further territories in their network by gaining access to additional distributors. Their cost becomes relevant and must be expensed. - How many new distributors would be required to cover the cost of hiring these 2 new sales reps? (d). Synergyica is considering a 10% reduction in the price of its offerings. - What absolute increase in its sales revenue would be needed to maintain the present line contribution (i.e., the present level of total contribution dollars)?
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Answer a To compute Synergyicas sales revenue we need to multiply the total industry sales by Synergyicas market share Total industry sales 100000000 ... View the full answer
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Authors: Alfred A. Marcus, Timothy J. Hargrave
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