Financial_problems1

# Financial_problems1 - Financial Management 1 In-Class...

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Financial Management 1 In-Class Problems

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Total sales revenue - total cost of goods sold or \$ 200 - \$ 100 = \$ 100 A s % = (100/200) x 100% = 50% GROSS MARGIN Gross margin (or gross profit) is: On a per-unit basis, unit selling price - unit cost of goods sold. Unit selling price = \$ 200/100 = \$2 Unit cost of goods sold = \$ 100 / 100 = \$ 1 Gross margin / gross profit = \$2 - \$1 = \$1
TRADE MARGIN Problem: If the consumer retail selling price is \$10, what should the manufacturer’s product’s selling price be if the gross margins are known. Unit Selling Price Unit Selling Price Gross Margin as a Percentage of Selling Price Gross Margin as a Percentage of Selling Price Unit Cost of Goods Sold Unit Cost of Goods Sold Marketing Channel Marketing Channel Manufacturer \$4.32 \$4.80 10.0% Wholesaler \$4.80 \$6.00 20.0% Retailer \$6.00 \$10.00 40.0% Consumer \$10.00 Green = known variables; Yellow = Answer

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Contribution Margin Example: Unit Selling Price = \$10; Unit Variable Costs = \$5, Fixed cost =
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Financial_problems1 - Financial Management 1 In-Class...

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