Question

Assume that the total sales revenue for 2018 is projected to be $1,177,167. Also consider the following costs for Shannon's Brewery:

Packaged (Cans & Bottles): $80,000
Shrinkage/WIP Loss: $240,000
Contract Labor: $18,000
Direct Labor: $30,444
Freight: $18,000
Consumer Advertising: $28,271
Trade Promotion: $180,000
Salaries & Benefits: $180,000
Sales Promotion: $180,000

Compute Shannon's %NMC. Round your answer to the nearest percent. For example, if your computed answer is 99.4%, your answer rounds down to 99%. If your computed answer is 99.5%, you should round up to 100%.

Answer 1

To calculate Shannon's Brewery %NMC, marketing-related costs (totaling $388,271) are deducted from projected sales revenue ($1,177,167) and the result is divided by the total sales revenue, yielding an %NMC of 67%.

Step-by-step explanation:

To compute Shannon's percentage of Net Marketing Contribution (%NMC), we need to subtract all the marketing-related costs from the sales revenue and then divide by the total sales revenue. The formula for %NMC is: (Total Sales Revenue - Marketing-related costs) / Total Sales Revenue * 100%.

First, let's identify the marketing-related costs from the provided figures:

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Add these marketing-related costs together:

$28,271 + $180,000 + $180,000 = $388,271

Now, let's subtract this total from the projected sales revenue to determine the Net Marketing Contribution:

$1,177,167 - $388,271 = $788,896

Finally, to find the %NMC, divide this number by the total sales revenue:

$788,896 / $1,177,167 * 100% = 67%

%NMC is therefore 67% to the nearest percent.