Company AF was once a favorite for the teenage people, which is now considering lesser costs on all the items it sells as to win them back after few years of decline in the sales. The total sales was $4 billion in the previous year, but they have been decreasing in a weak economy and an intensively competitive environment. The cost deductions are usually effective in maximizing the sales. However, the marketer is required to assess the amount of sales that must rise before the reduction in price pays off and rises the income enough to make it worth doing. Characters in given case: Company AF To calculate: The amount of percentage should the cost declines if Company A needs to maintain the percentage of gross margin at 60%.

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Chapter 9, Problem 9.14MA

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Company AF was once a favorite for the teenage people, which is now considering lesser costs on all the items it sells as to win them back after few years of decline in the sales. The total sales was $4 billion in the previous year, but they have been decreasing in a weak economy and an intensively competitive environment.

The cost deductions are usually effective in maximizing the sales. However, the marketer is required to assess the amount of sales that must rise before the reduction in price pays off and rises the income enough to make it worth doing.

Characters in given case:

Company AF

To calculate: The amount of percentage should the cost declines if Company A needs to maintain the percentage of gross margin at 60%.

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