Question

1. 
   ONLINE CHANNEL ANALYSIS CONS> HARD TO PERCEIVE QUALITY THROUGH ONLINE SALES ( Suggestion» Custoemr review section should be emphasized on the webpage design). Al Facebook, Instagram, Pinterest CHANNEL DECISION TARGET TO INCREASE PROFITS BY AT LEAST $100,000 If they go in this direction, the recurring cash costs associated with Trade Shows will be put into this channel $93,000 No additional effects on any other parts of the operations of the firm Budget> $93,000 Cost per click model Competitive Bid price per Click Between 3 and 5% of website visitors will make a purchase Average Order> They are charged by the click. Once clicks reach limit of the day, they no longer are shown $1.05 One earrings and two necklaces Prices will be the same Retailing Price per Sales per Contribution Order Per Unit Contribution Contribution Cost per Order Costs Per Order per Order Percentage Unit $24 $34 1 earrings 2 Necklaces $5.50 $8.05 $5.50 $16.10 $24 68 $18.50 $25.95 $18.50 $51.90 76.3% $21.60 $92 $70.40 93000 PRICE PER CLICK 1.05 88571.43 EXPECTED NUMBER OF VISITS
   For each distribution strategy calculate the unit contribution and contribution margin rate for each of the two product lines. What is the weighted average contribution margin rate for an order at a trade show and for an online order?

Data from Foxy Originals --- if you need a data file please connect

Please find attached the data for online and trade show sales/distribution

1. Do the variable costs for both products (necklaces and pair of earrings) differ between trade shows and online sales?
2. Calculate the variable cost per order incurred at a trade show and the variable costs incurred per online order
3. For each distribution strategy calculate the unit contribution and contribution margin rate for each of the two product lines. What is the weighted average contribution margin rate for an order at a trade show and for an online order?
4. Calculate Foxy’s breakeven point for each distribution strategy
5. Which distribution channel is projected to be more profitable in 2015?

Answer 1

Trade show analysis

Contributionp perneclace =223.75÷25=8.95 dollars

Contribution per pair of earings =78÷12=6.5 dollars

Online channel analysis

Cont per necklace= 25.95 dollars

Cont per earings =18.50 dollars

Variable costs differ between the two analysis giving two different contributions

In my opinion online analysis is better as it is creating a higher contribution than the trade show analysis