Completely Nuts Peanut Butter wanted to analyze their resultsfor their most recent month of sales in the Southwestern US. Theirplan and actual results were as follows:
MeasureMarch
PlanMarch
ActualDemand25,000,00026,100,000Share14.3%14.5%Marketing Exp.300,000$288,000Price$3.50$3.18Cost$1.70$1.50
What is the NMC variance (in 000s) for Completely Nuts?
Expert Answer
Answer:
- NMC = Net marketing contribution = (Volume * Margin) -MArketing expenses
- Where , Volume = Demand * Share
- Margin = Price – Cost
March Plan :
- Margin = Price – Cost = 3.5 – 1.7 = $1.80
- Volume = Demand *Share = 25,000,000 *0.143 = 3,575,000
- Marketing Exp = 300,000
- NMC Planned = (3,575,000*1.80) – 300,000 = $6,135,000
March Actual:
- Margin = Price – Cost = 3.18 – 1.5 = $1.68
- Volume =
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