The Chinese cosmetics brand Herborist was launched in 1998. Today it has a network of 300 stores and a counter presence in 900 Chinese department stores. Retail revenues are now in excess of $300 million. For the first seven years, although revenues increased, the brand struggled to make a profit. However, this was a period when Herborist, a national brand, was trying to compete with huge multinationals for a share of the market. Herborist has certainly aimed for the luxury end of the cosmetics market. In China, some of its products sell for $70. Its overseas market is led by the Tai Chi product line, with the top-priced product, day and night cream, selling for $100. The product line has become so successful that it now accounts for 40 percent of the total revenues from overseas markets. 

If the company’s variable cost for the day and night cream is $16.70, what is the contribution margin of the product? Assume that the contribution margin is the same across the whole range of products. Work out the probable gross profit of the business.

Answer rating: 100% (QA)

Sales is assumed to be at 300000000 Price of Tai Chi ... View the full answer