Results 1 to 4 of 4

Thread: Sales, Finance

  1. #1

    Sales, Finance

    FoodFor Less (FFL), a grocery store, is considering offering one hour photodeveloping in their store. The firmexpects that sales from the new one hour machine will be $150,000 peryear. FFL currently offers overnightfilm processing with annual sales of $100,000. While many of the one hour photo sales will be to new customers, FFLestimates that 60% of their current overnight photo customers will switch anduse the one hour service.

    Supposethat of the 60% of FFL's current overnight photo customers, half would starttaking their film to a competitor that offers one hour photo processing if FFLfails to offer the one hour service. Thelevel of incremental sales in this case is closest to:
    A) $60,000
    B) $150,000
    C) $90,000

    D) $120,000

    Please provide your answer/explanation and calculations. Thank you.

  2. #2
    Elite Member
    Join Date
    Jun 2007
    Posts
    17,785
    Quote Originally Posted by financier View Post
    FoodFor Less (FFL), a grocery store, is considering offering one hour photodeveloping in their store. The firmexpects that sales from the new one hour machine will be $150,000 peryear. FFL currently offers overnightfilm processing with annual sales of $100,000. While many of the one hour photo sales will be to new customers, FFLestimates that 60% of their current overnight photo customers will switch anduse the one hour service.

    Supposethat of the 60% of FFL's current overnight photo customers, half would starttaking their film to a competitor that offers one hour photo processing if FFLfails to offer the one hour service. Thelevel of incremental sales in this case is closest to:
    A) $60,000
    B) $150,000
    C) $90,000

    D) $120,000

    Please provide your answer/explanation and calculations. Thank you.
    What are your thoughts?

    If you are stuck at the beginning tell us and we'll start with the definitions.

    Please share your work with us ... even if you know it is wrong

    You need to read the rules of this forum. Please read the post titled "Read before Posting" at the following URL:

    http://www.freemathhelp.com/forum/th...Before-Posting
    “... mathematics is only the art of saying the same thing in different words” - B. Russell

  3. #3
    Ok. I don't understand which incremental sales should I count because the one hour service doesn't even work (as said in this task, it failed). But if I counted incremental sales of overnight service, then it would stay $100,000.
    For some reason I think that this problem is meant to check if we are able to notice that competitors are not taken into account when counting incremental sales. Then the answer should be C (if we're counting incremental sales of one hour service).

  4. #4
    Elite Member stapel's Avatar
    Join Date
    Feb 2004
    Posts
    15,923

    Cool

    Quote Originally Posted by financier View Post
    Ok. I don't understand which incremental sales should I count because the one hour service doesn't even work (as said in this task, it failed)
    What do you mean when you say that "the one hour service doesn't even work" and that "it failed"? The only mention of failure was the percentage of current customers who might switch to a competitor if FFL fails to (that is, doesn't) enact the new plan.

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •