Solved: Timothy Donaghy has developed a unique formula

for growing hair

Timothy Donaghy has developed a unique formula for growing hair

Timothy Donaghy has developed a unique formula for growing hair. His proprietary lotion, used
regularly for 45 days, will grow hair in bald spots (with varying degrees of success). Timothy
calls his lotion Hair-Again and is selling it via the telephone and Internet. His major form of
marketing is through 15-minute infomercials and Internet advertising. Timothy sells each
16-ounce bottle of Hair-Again for $15 and pays a commission of 3 percent of sales to telephone
operators who filed the 1-800 phone calls from potential customers. Fixed marketing expenses
for each quarter of the coming year include:

Internet banner ads ........ $7,600

Telephone operator time...... 4,000

Travel ............. 3,000

In addition, early next year Timothy intends to film and show infomercials on television. He
expects the cost to be $10,000 in quarters 1 and 2, and that the cost will rise to $25,000 in each
of quarters 3 and 4. Timothy expects the following unit sales of Hair-Again:

Quarter 1 ...... 5,000

Quarter 2 ...... 15,000

Quarter 3 ...... 40,000

Quarter 4 ...... 35,000

Required:

1. Construct a marketing expense budget for Hair-Again for the coming year. Show total
amounts by quarter and in total for the year.

2. What if the cost of internet ads rises to $15,000 in Quarters 2 through 4? How would that
affect variable marketing expense? Fixed marketing expense? Total marketing expense?

Timothy Donaghy has developed a unique formula for growing hair

Reach out to freelance2040@yahoo.com for enquiry.

 ANSWER
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Reach out to freelance2040@yahoo.com for enquiry.

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