MINI-CASE
Coller Inc.is an American firm that manufactures flat panel LCD computer monitors.The firm has a 5% share of a 2 million unit market.The firm's marketing department calculates that its acquisition cost is $13 million and retention costs is $5 million.The market for flat panel LCD computer monitors is in the late growth stage of the product life cycle,and Coller currently sells its product for $2,000 and experiences variable costs per unit of $1,600.
-Mini-Case Question.If Coller Inc.has a gross profit of $40 million,what is its net marketing contribution?

Question

Quizplus · Accepted Answer

To calculate net marketing contribution, we need to subtract acquisition costs, retention costs, and variable costs per unit from the gross profit.

Gross profit = $40 million
Acquisition costs = $13 million
Retention costs = $5 million
Variable costs per unit = $1,600
Total unit sales = 2 million

Contribution per unit = (selling price - variable cost per unit) = ($2,000 - $1,600) = $400

Total contribution = (contribution per unit x total unit sales) = ($400 x 2 million) = $800 million

Net marketing contribution = (gross profit - acquisition costs - retention costs - variable costs per unit x total unit sales)
= ($40 million - $13 million - $5 million - $1,600 x 2 million)
= $22 million

Therefore, the answer is C) $22 million.

MINI-CASE Coller Inc.is an American Firm That Manufactures Flat Panel LCD