Marketing $by$ the Numbers Exercise Set Three

$3\mathrm{.}1$ Synegys, Inc. manufactures accent lighting that $is$ sold $to$ consumers through retail outlets $in$ the southern United States. The company$s$ sales are $$10$ million and contribution margin $is40\%.$ The company $is$ considering options $to$ increase sales.

The marketing manager has suggested increasing consumer advertising $by$ $$450,000.By$ how much would dollar sales need $to$ increase $to$ break even $on$ this expenditure? What percentage increase $in$ sales does this represent?

Another suggestion $isto$ make $a10\%$ across$-$the$-$board price reduction. $By$ how much would dollar sales need $to$ increase $to$ maintain Synegys$s$ current contribution? What percentage increase $in$ sales does this represent?

$3\mathrm{.}2$ A company currently has $4,000$ industrial customer accounts and wants $to$ expand $to$ another geographic market $to$ acquire $2,000$ more. $It$ currently has $36$ sales representatives who earn $$70,000$ per year and $10\%$ commission $on$ sales. Each customer account $is$ visited $10$ times per year, and sales reps spend $1$ hour $on$ each call. $An$ average salesperson works $2,000$ hours per year $(50$ weeks per years $40$ hours per week$),$ but each will spend $15$ hours a week $on$ nonselling activities, such $as$ administrative tasks and travel. The company$s$ contribution margin $is45\%,$ and each customer generates $an$ average $$80,000in$ sales for the company.