Swisher Mover

Swisher Mower and Machine Company

Prosuce mowers
Cannot take advantage of excess capacity
forget not broaden their area of sales
Will loose emf to make additional 8,200 social units
But to make them at 2.55% reach margin is not worth it

Alternative B ( study the private-label offer)
Pros
Additional introduction of 8200 mowers per year
Almost triple the production of late years
, and misc. cost increased
COGS increases by 7.



5%/unit
Added financing charge (appendix A3)
Very express bar get aheading position

Alternative C (Increase Advertisement expense by $25/unit)
Pros
Will increase sales
Increases awareness for all mowers not just charge King
Will be able to s
For 1997
Cons
We allow for reach people that are not interested in buying a mower
Waste of advertising dollars
Even if we gain additional 250 sales, our gross profit will not pout the expenses (appendix C4)
Contribution margin will decrease from $97 to $72
No way to tell how many people we could reach or how many sales would result from advertisement
Appendices:

Appendix A1

Appendix A2
Ride King

Proposed Private Brand

Sales
$650
Sale Price -5%
$617.50
COGS
$553
COGS
$601.75
Labor

parts

Gross Margin

whole contribution

Unit contribution margin

14.92%-2.55%
=12.37% decrease in unit contribution margin

stratum 2 Private-label
Extra units = 8,200

Sales
$5,063,500
COGS
$4,934,350
Gross Margin
$129,150
(cannibalization)
$29,100

$650 sale price - $578 COGS/unit =
$72/$650 = 11.1% contribution margin
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