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4. Blistex was reviewing price and promotion alternatives for two products in its line: Regular Blixtex and Sensitive Lip Blistex. The price and promotion alternatives for the two products by their respective brand managers include the possibility of using additional promotion or a price reduction to stimulate sales volume. Here's what we know. Blistex Regular Blistex Sensitive Lips 2.00 1.40 Unit Price $1.00 Unit Variable Costs 0.25 Unit Contribution .75 .60 Unit volume 1,500,000 1,000,000 Both brand managers are considering either a price reduction of 5% or an incremental increase of $100,000 in advertising. 1. What absolute increase in sales units and dollar sales will be necessary to recoup the incremental increase in advertising expenditures for Regular? How about for Sensitive Lips? 2. What is the absolute increase in unit sales and dollar sales will be necessary to maintain the level of total contribution dollars if the price of each product is reduced by 5%

4. Blistex was reviewing price and promotion alternatives for two products in its line: Regular Blixtex and Sensitive Lip Blistex. The price and promotion alternatives for the two products by their respective brand managers include the possibility of using additional promotion or a price reduction to stimulate sales volume. Here's what we know. Blistex Regular Blistex Sensitive Lips 2.00 1.40 Unit Price $1.00 Unit Variable Costs 0.25 Unit Contribution .75 .60 Unit volume 1,500,000 1,000,000 Both brand managers are considering either a price reduction of 5% or an incremental increase of $100,000 in advertising. 1. What absolute increase in sales units and dollar sales will be necessary to recoup the incremental increase in advertising expenditures for Regular? How about for Sensitive Lips? 2. What is the absolute increase in unit sales and dollar sales will be necessary to maintain the level of total contribution dollars if the price of each product is reduced by 5%

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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4. Blistex was reviewing price and promotion alternatives for two products in its line: Regular Blixtex and Sensitive Lip Blistex. The price and promotion alternatives for the two products by their respective brand managers include the possibility of using additional promotion or a price reduction to stimulate sales volume. Here's what we know. Blistex Regular Blistex Sensitive Lips 2.00 Unit Price Unit Variable Costs 0.25 Unit Contribution 75 $1.00 1.40 .60 Unit volume 1,500,000 1,000,000 Both brand managers are considering either a price reduction of 5% or an incremental increase of $100,000 in advertising. 1. What absolute increase in sales units and dollar sales will be necessary to recoup the incremental increase in advertising expenditures for Regular? How about for Sensitive Lips? 2. What is the absolute increase in unit sales and dollar sales will be necessary to maintain the level of total contribution dollars if the price of each product is reduced by 5%
Transcribed Image Text:4. Blistex was reviewing price and promotion alternatives for two products in its line: Regular Blixtex and Sensitive Lip Blistex. The price and promotion alternatives for the two products by their respective brand managers include the possibility of using additional promotion or a price reduction to stimulate sales volume. Here's what we know. Blistex Regular Blistex Sensitive Lips 2.00 Unit Price Unit Variable Costs 0.25 Unit Contribution 75 $1.00 1.40 .60 Unit volume 1,500,000 1,000,000 Both brand managers are considering either a price reduction of 5% or an incremental increase of $100,000 in advertising. 1. What absolute increase in sales units and dollar sales will be necessary to recoup the incremental increase in advertising expenditures for Regular? How about for Sensitive Lips? 2. What is the absolute increase in unit sales and dollar sales will be necessary to maintain the level of total contribution dollars if the price of each product is reduced by 5%
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