Assignment : Direct Marketing Math
Question 1:
A mailing of 100,000 pieces with a total promotion cost of $50,000 generated $180,000 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:
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Calculate
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Answer
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Total Orders
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Total Contribution
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Total Profit
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Profit as a Percentage of net sales
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Response Percentage
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Orders/Thousand
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Promotion Cost/Thousand
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Contribution/Thousand
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Profit/Thousand
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Question 2:
A company has the following cost profile:
Cost of Goods: 34% of net sales
Operating Expenses: 10% of net sales
Overhead Expenses: 8% of net sales
What is the contribution to promotion costs and profit?
Find the sales/thousand break-even if:
a. Promotion cost is $500/thousand
b. Promotion cost is $500/thousand and there is a targeted profit of 10 percent