Question

The next three questions refer to Jimmy Choo shoes, who sells 100,000 pairs of shoes to boutiques across the country:

Answer 1

Answer:

Jimmy Choo

a. 4. None of the above

b. 3. 1,172

c. 4. None of the above

Explanation:

1) Data and Calculations:

Leather and metals: $25/pair

Shoe boxes:                $1/pair

Shoemaker wages:  $10/pair

Variable costs =       $36/pair

Selling price to boutique: $100.00

Contribution = $64/pair

2) Fixed Costs and Profit:

Advertising & promotion: $200,000

Executive Salaries            $300,000

Total fixed costs =            $500,000

Net profit =                        $140,000

3) Per unit gross marketing contribution:

Marketing cost per unit = $2 ($200,000/100,000 units)

Gross marketing contribution = $64/$2 = 3200%

4) Increase fixed costs by $75,000 to $575,000

Sales unit to sell = Fixed costs + profit/contribution margin per unit

= $575,000 + 140,000 /$64

= 1,172

5) Change in sales:

Change = 1,172 - 1,000 = 172

Percentage change = 172/1,000 x 100 = 17.2%