A mailing of 100,000 pieces with a total promotion cost of $50,000 generated $15
ID: 2660952 • Letter: A
Question
A mailing of 100,000 pieces with a total promotion cost of $50,000 generated $150,000 net sales. The average order size was $60 and each order contributed $25 to promotion costs after paying for the cost of goods, fulfillment, and an overhead allocation. Calculate the following:
Calculate the following:
Calculate
Answer
Total Orders
Total Contribution
Total Profit
Profit as a Percentage of net sales
Response Percentage
Orders/Thousand
Promotion Cost/Thousand
Contribution/Thousand
Profit/Thousand
Calculate
Answer
Total Orders
Total Contribution
Total Profit
Profit as a Percentage of net sales
Response Percentage
Orders/Thousand
Promotion Cost/Thousand
Contribution/Thousand
Profit/Thousand
Explanation / Answer
a.
Total No of Orders = Net Sales / Average order size
= 150000 / 60
= 2500
b.
Total contribution = 2500 * 25
= 62500 $
c.
Total Profit = (60 - 25) * 2500
= 87500 $
d.
profit as a percentage of net sales = (87500/150000) %
= 58.33 %
e.
Response percentage = 2500 / 100000
= 2.5%
f.
Orders /thousand = 2500 /1000
=2.5
g.
Promotion cost/thousand = 50000 /1000
= 50$
h.
Contribution /thousand = 62500 / 1000
= 62.5$
i.
Profit/thousand = 87500 /1000
= 87.5 $
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