Assume you had a brand, X-Bike, that had gross margins of $690 per bike in Q5. Its brand rating was 71 and it sold 300 units. After a redesign costing $30,000, the gross margins for X-Bike are projected to be $600 per bike, but its brand rating rises to 80. Because your A-Bike, with a brand judgement of 80 in the same segment and similarly priced, had a market demand of 500 last quarter and you estimate the overall market will grow by 50% next quarter, what overall gross margin would you expect for X-Bike (assume all other things, like ad quality, salesforce, etc. are equal)?
Assume you had a brand, X-Bike, that had gross margins of $690 per bike in Q5. Its brand rating was 71 and it sold 300 units. After a redesign costing $30,000, the gross margins for X-Bike are projected to be $600 per bike, but its brand rating rises to 80. Because your A-Bike, with a brand judgement of 80 in the same segment and similarly priced, had a market demand of 500 last quarter and you estimate the overall market will grow by 50% next quarter, what overall gross margin would you expect for X-Bike (assume all other things, like ad quality, salesforce, etc. are equal)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Assume you had a brand, X-Bike, that had gross margins of $690 per bike in
Q5. Its brand rating was 71 and it sold 300 units. After a redesign costing
$30,000, the gross margins for X-Bike are projected to be $600 per bike, but its
brand rating rises to 80. Because your A-Bike, with a brand judgement of 80 in
the same segment and similarly priced, had a market demand of 500 last
quarter and you estimate the overall market will grow by 50% next quarter, what
overall gross margin would you expect for X-Bike (assume all other things, like
ad quality, salesforce, etc. are equal)?
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