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  • Total Profit Approach Can Help Evaluate Possible Plans:: - Selling Fresh Milk

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    The total profit approach can help evaluate marketing plans by estimating pre-tax profit based on sales forecasts, production costs, distribution costs, and marketing costs. An example is given of calculating total profit for a plan to sell fresh milk, which estimates annual revenue of $60,000 based on monthly sales of 1,667 liters at $3 per liter over 12 months, and pre-tax profit of $2,000 after accounting for estimated production costs of $36,000, distribution costs of $10,000, and marketing costs of $12,000. The total profit approach allows managers to assess whether a plan or strategy will be effective before implementing it based on expected profitability.

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    The total profit approach can help evaluate marketing plans by estimating pre-tax profit based on sales forecasts, production costs, distribution costs, and marketing costs. An example is given of calculating total profit for a plan to sell fresh milk, which estimates annual revenue of $60,000 based on monthly sales of 1,667 liters at $3 per liter over 12 months, and pre-tax profit of $2,000 after accounting for estimated production costs of $36,000, distribution costs of $10,000, and marketing costs of $12,000. The total profit approach allows managers to assess whether a plan or strategy will be effective before implementing it based on expected profitability.

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    1 views2 pages

    Total Profit Approach Can Help Evaluate Possible Plans:: - Selling Fresh Milk

    Uploaded by

    huyen
    The total profit approach can help evaluate marketing plans by estimating pre-tax profit based on sales forecasts, production costs, distribution costs, and marketing costs. An example is given of calculating total profit for a plan to sell fresh milk, which estimates annual revenue of $60,000 based on monthly sales of 1,667 liters at $3 per liter over 12 months, and pre-tax profit of $2,000 after accounting for estimated production costs of $36,000, distribution costs of $10,000, and marketing costs of $12,000. The total profit approach allows managers to assess whether a plan or strategy will be effective before implementing it based on expected profitability.

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    Total profit approach can help evaluate possible plans:

    - When you plan about marketing strategy or find out other factors
    beyond profit with a way accurately. The establishment of a total profit
    approach before the real profit will evaluate whether your plan, your
    strategies or your predict will be effective or not.
    - And, the manager will look at the marketing plan and give the total profit
    approach, so that plan must be exactly what the market was.
    Below is an example about how to calculate the total profit approach in one year.
    - selling fresh milk
    it includes some important component:
    Market Research: 20,000 liters of fresh milk/year.
    Sales Forecast: Monthly sales quantity: 1,667 liters (20,000 liters/year ÷ 12
    months).
    Seasonal factor: 20% increase during the summer.
    Annual revenue: $60,000 (1,667 liters/month * $3.00/liter * 12 months).
    Production cost: $36,000
    Distribution cost: $10,000
    Marketing and advertising cost: $12,000
    Annual revenue: $60,000 (1,667 liters/month * $3.00/liter * 12 months).
    Pre-tax profit: $2,000 ($60,000 - $36,000 - $10,000 - $12,000).

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