How to calculate gross profit when the retailer margin is blank?

Question

I'm not sure how to calculate the gross profit for the Seasoned Rotisserie when there is a "?" on retailer margin - the answers / process on the casebook are a little unclear too. I know that for the standard rotisserie you get gross profit by multiplying retail price (3.33) x retailer margin (0.30) x number of sales (1000/3.33 = 300) to get $300, which seems to be right according to the casebook. However, I just don't know how to solve for the gross profit for the right column on seasoned rot. chicken... especially the question mark is confusing me. Any help would be super appreciated, thanks a lot guys.

(This is from the Kellogg 2011 casebook, case 7 Rotisserie Chicken if that helps)

Answer 1

Hey! This is really a typical question that, if you are familiar with, it will increase your chance get an offer. Let's structure this.

PART 1
I checked the prompt on the case book. Another exhibit showed that: the retailer margin is 25%

PART 2
Retailer profit for Seasoned Chicken compared to Standard Chicken
Retailer profit = # of chickens sold * (price per chicken * retailer margin per chicken)

Standard Chicken (total profit for retailers = $300 + $600 = $900/week)

Store A: $1,000 (weekly sales) * 30% (retailer margin) = $300 overall profit
Store B: $2,000 (weekly sales) * 30% (retailer margin) = $600 overall profit

Test Market BBQ Seasoned Chicken (total profit for retailers = $400+ $675= $1,075/week)

Store C: $1,600 (weekly sales) * 25% (retailer margin) = $400 overall profit
Store D: $2,700 (weekly sales) * 25%* (retailer margin) = $675 overall profit

FORMULA

Profit = Revenu * margin
Profit = Revenu - Cost

Answer 2

Hi there,

This is a really great lesson for the following two points:

1) Pay attention to all information provided to you. Make sure you write down + note all important pieces of information. Keep them organized, and make sure to scan through your notes any time you think a piece of information is missing...it might not be!

2) When in doubt, ask (smartly). If you clearly don't have a number when you need one, just ask! However, when you ask, lead with something. In this case, you could say: "So I see that standard rotisseries carries a quite impressive margin of 30%. I assume that the premium rotisserie would carry an even higher margin given that it is a luxury product. Do we have numbers on this? Perhaps 50%?"

Answer 3

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