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Metrics Madness Fall 2013 Review

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Metrics Madness Review Fall 2013

1. The local Mastermind store sells innovative educational toys. Part of their service is giving advice to customers about the best toys for a particular age group, which requires having more customer service representatives in the store. During the month long Christmas buying season, it makes half of its $500,000 yearly sales. Its contribution margin on average is 40% and its fixed costs for the year are about $150,000. The owner believes that she could make even higher sales, if she had more customer service representatives on the floor during the peak season. She plans on hiring four more people for 200 hours each at $20 per hour. How much additional revenue does she have earn to the nearest dollar to breakeven?

2. John’s Clothing Store employs three salespeople. It generates annual sales of $1 million and an average contribution margin of 30%. Rent is $50,000. Each sales person costs $50,000 per year in salary and benefits. How much would sales have to increase to the nearest dollar for John to break even on hiring an additional salesperson?

3. Eric makes custom fish flies for sports fisherman. It costs $1 for the raw materials for each fly. He sells these to a wholesaler for $2.50 per unit. The wholesaler sells them to a retailer for $3.50 per unit and the retailer sells them to a consumer for $5.00 each. What is the percentage margin to the nearest whole number for the entire chain per unit?

4. Anne hand-knits baby blankets. The wool costs about $25 per blanket. She sells the blankets to a wholesaler for $45. The wholesaler sells the blankets to speciality baby shops for $60, where the blankets retail for $80. What is the percentage margin to the nearest whole number for the entire chain per blanket?

5. Larry's Lock and Key is a locksmith operation which replaces automobile ignitions on the highway.

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