25 May Question 6. A family rents videos from a local video store. On average, they spend $80.00
Question
6. A family rents videos from a local video store. On average, they spend $80.00 a month. The store’s contribution margin is 45 percent and the average customer defection is 40 percent. Determine the value of a loyal customer.
7. A guest at Raphael’s Italian Restaurant generally spends $150.00 on a meal. Most of Raphael’s customers are local and eat at the restaurant twice a month. If the restaurant’s margins are 60 percent, and a loyal customer is estimated to be worth $3000, determine the average defection rate.
8. A retail store sells a popular cosmetic called Devine and the store manager was given $100,000 by the corporate office to improve store performance any way she thinks best. The “base case” information is a price of $30 per bottle, a contribution margin of 0.50, a customer defection rate of 17%, and a repurchase frequency of 3 times a year. If these improvement funds could be used to either increase the contribution margin to 0.58 or reduce the customer defection rate to 15% or increase the repurchase frequency to 4 times per year, what is the best way to spend these funds? (Assume all other variables remain at the base case level for each improvement option.)
You may want to use the table below to help organize your computations and answer.
| Price | Contribution Margin | Repurchase Frequency | Defection Rate | VLV in $ |
| $30 | 0.50 | 3 | 17% | $264.69 |
| $30 | 0.58 | 3 | 17% | $307.00 |
| $30 | 0.50 | 3 | 15% | $300.00 |
| $30 | 0.50 | 4 | 17% | $352.92 |
Note: BLC is 1/.17 = 5.882 years and 1/.15 = 6.67 years.
1
9. A manufacturer of paint has two factories located in France and Spain and due to economic conditions must close one of them. The factory productivity data is as follows:
| Gallons of Paint | Resource Cost | |
| Produced (in 1,000s) | per Gallon | |
| Factory (France) | 4,600 | $4.25 |
| Factory (Spain) | 3,900 | $4.00 |
10. A retail store sells a popular cosmetic called Devine and the store manager was given $300,000 by the corporate office to improve store performance any way she thinks best. The “base case” information is a price of $30 per bottle, a contribution margin of 0.50, a customer defection rate of 20%, and a repurchase frequency of 3 times a year. If these improvement funds could be used to either (a) increase the contribution margin to 0.60 or (b) reduce the customer defection rate to 12% or (c) increase the repurchase frequency to 4 times per year, what is the best way to spend these improvement funds? (Assume all other variables remain at the base case level for each of the three improvement options.) VLC = P*CM*RF*BLC
a. What is the value of a loyal customer (VLC) for improvement option (a)?
b. What is the best way to use the $300,000 in improvement funds?
11. Consider the following information.
| First Quarter | Second Quarter | |
| Unit Selling Price | $15.00 | $17.00 |
| Total Units Sold | 12,000 | 11,500 |
| Labor Hours | 10,000 | 9,500 |
| Labor Cost/Hour | $8.00 | $8.00 |
| Material Usage (lbs.) | 6,000 | 5,500 |
| Material Cost/lb. | $12.00 | $11.50 |
| Other Costs | $25,000 | $23,000 |
a. Which quarter, First or Second, had the higher labor productivity (output quantity per labor dollar input)?
b. Which quarter, First or Second, had the higher material productivity (output quantity per material dollar input)?
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.