Marketing: Abercrombie​ & Fitch, once the favorite of loyal​ teens, is considering lowering prices on all items it sells in an effort to win them back after several years of sales declines.​ A&F's total sales were ​$5 billion last​ year, but they have been declining in the face of a weak economy and an intensively competitive retail environment. Price reductions are often effective in increasing​ sales, but marketers need to analyze how much sales must go up before a price reduction pays off and increases revenue enough to make the it worth doing. Assuming​ A&F's gross profit margin is 55% and cost of goods sold represents the only variable​ cost, by what percentage must costs decrease to maintain the gross margin percentage of 55% if​ A&F lowers prices by 10%? Set the initial price equal to​ $1.00. Then the new price is ​$_____

The Protek Company has been growing very fast, but profitability has declined from 11.85% to 2.36% in just two years.  Costs have increased faster than sales and expenses are out of control.  The Board of Directors has appointed Bob Smith to come up with some recommendations that are likely to help get the situation under control.  He has made the following suggestions, but has hired you to actually put the numbers into proforma statements to present to the Board at their next meeting. Income Statement The company will slow down the growth of sales to 15% for the next year (20X4). Bob does not see any easy fixes to the cost of good sold situation, so those will go up 15% in line with sales, leading to the same gross margin percent as this past year. Bob has decided that the budgets for the Marketing and Research and Development departments should be exactly the same dollar amount as in 20X3. He feels that imposing that particular discipline to the Marketing Department will be good for…

Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows: Year 1 Year 2 Year 3 Sales 14,500,000 9,500,000 9,000,000 Operating income 1,200,000 1,145,000 945,000 Average assets 15,000,000 15,000,000 16,750,000 For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70% during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system. She also estimates that sales and operating income will be restored to Year 1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share. 1.…

A successful franchise owner of a prestigious sporting goods chain is feeling the effects of technology, with more and more online sales and less and less customers in the shops. Locally there are three stores, and typically each store needs the following positions staffed for optimum profitability and success:  a store manager an assistant manager five department managers and 20 customer service representatives,  Averaging $1 200 000 in annual revenue. However, there has been a trend of 20 percent sales decline in stores, with an increase of 30 percent sales online (last year the online revenue stream was $300 000). The franchise owner was able to handle all of the online sales with a team of five full-time remote workers (working from home) last year.  The owner wants each store to maintain its productivity, which he measures as the revenue per employee. He also thinks that there is potential to grow the online business. Please help the owner by answering the following questions.…

Return on investment, Margin, Turnover Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows. For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates  that inventories will be reduced by 70 % during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system.She also estimates that sales and operating income will be restored to Year  1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share.(Note : Round all numbers to two decimal places.) Required : 1. Compute the ROI, margin, and turnover for Years 1, 2…

Case Study The coronavirus pandemic drastically reduced the number of people flying in the United States. Because of this, every major airline experienced a drop in stock prices from February 2020 to November 2020. But these drops ranged from 57% for American Airlines to 21% for Southwest Airlines. Why such a difference? Investopedia points out that Southwest has extremely efficient operations, low-cost pricing, and innovative logistics solutions. In addition, they incorporate customer experience and forward planning into their strategy. All of these things helped Southwest to weather the pandemic, and they all require that Southwest maintains careful control over its operations. One of the other things that helped Southwest during the pandemic was their superior service desk performance. They achieved this performance, in part, through measuring key factors in customer service, looking at customer service leaders (benchmarking), and making changes to bring their customer service costs…