Jordan Enterprises has estimated the contribution margin (P MC)/P for its Air Express model of basketball shoes to be 40 percent. Based on market research and past experience, Jordan estimates the following relationship between the sales for Air Express and advertising/promotional outlays: ADVERTISING/PROMOTIONAL OUTLAYS ($) SALES REVENUE ($) 500,000 600,000 700,000 800,000 900,000 1,000,000 4,000,000 4,500,000 4,900,000 5,200,000 5,450,000 5,600,000 a. What is the marginal revenue from an additional dollar spent on advertising if the firm is currently spending $1,000,000 on advertising?b. What level of advertising would you recommend to Jordan’s management?
Jordan Enterprises has estimated the contribution margin (P MC)/P for its Air Express model of basketball shoes to be 40 percent. Based on market research and past experience, Jordan estimates the following relationship between the sales for Air Express and advertising/promotional outlays: ADVERTISING/PROMOTIONAL OUTLAYS ($) SALES REVENUE ($) 500,000 600,000 700,000 800,000 900,000 1,000,000 4,000,000 4,500,000 4,900,000 5,200,000 5,450,000 5,600,000 a. What is the marginal revenue from an additional dollar spent on advertising if the firm is currently spending $1,000,000 on advertising?b. What level of advertising would you recommend to Jordan’s management?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
Jordan Enterprises has estimated the contribution margin (P MC)/P for its Air Express model of basketball shoes to be 40 percent. Based on
| ADVERTISING/PROMOTIONAL OUTLAYS ($) | SALES REVENUE ($) |
|
500,000 600,000 700,000 800,000 900,000 1,000,000 |
4,000,000 4,500,000 4,900,000 5,200,000 5,450,000 5,600,000 |
a. What is the marginal revenue from an additional dollar spent on advertising if the firm is currently spending $1,000,000 on advertising?
b. What level of advertising would you recommend to Jordan’s management?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.