Your Goal Is to Sell Jogging Shoes to Those 65

question 94

Multiple Choice

Your goal is to sell jogging shoes to those 65 and other who live in Florida. Here is some information you have collected: (1) There are 3 million joggers 65 and older in the U.S. (2) 600,000 of them live in Florida. (3) Florida attracts 20% of all people who move when they retire. (4) You estimate that during your first year you will capture 2 percent of the Florida joggers who are age 65 or older. (5) You estimate that your sales will increase by 25% in year 2.
-What is the estimated first-year demand for your jogging shoes?

• A)60,000 pairs of shoes
• B)12,000 pairs of shoes
• C)120,000 pairs of shoes
• D)600,000 pairs of shoes

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing towards covering fixed costs and profit.

Gross Margin

The difference between sales revenue and the cost of goods sold, divided by revenue, expressed as a percentage, indicating the financial health and profitability of a company's core activities.

Net Operating Income

The profit realized from a business's operations after subtracting all operation-related expenses from gross income.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue is contributing to the fixed costs and net profit after covering the variable costs.