Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Impact on profit
- This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
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- November 15, 2016 at 4:59 pm #349102
GUMC is considering offering either free overnight delivery or reduced prices on renewal orders.
Currently, the GUMC pharmacy has revenue of $54,990,000 per year on 846,000 orders. The gross margin (price minus cost of drugs) is approximately 25 percent. Free overnight delivery is expected to cost $9 per order and result in 125,000 renewal orders per year. To deal with the increased volume,the pharmacy will need to hire two pharmacists at $90,000 each per year and an additional staff person (to handle shipping) at $50,000 per year. Alternatively, the pharmacy can generate 125,000 renewal orders per year by offering 20 percent off the prices of renewal orders.With this option, two pharmacists must be hired, but no additional staff person will be needed.
Estimate the impact on annual pharmacy profit of free overnight delivery and 20 percent off on renewals.
November 15, 2016 at 5:56 pm #349122Do not set me test questions and expect an answer!
That is not what this forum is for.
Unless it is homework (and we certainly do not do homework for you) then you must have an answer in the same book in which you found the question. If you say which bit of the answer is not clear then of course I will try and help you.
I assume you have watched my lectures – they are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
I also assume that you are practicing questions from a Revision Kit from one of the ACCA approved publishers, in which case you do have answers together with explanations.November 16, 2016 at 8:47 am #349226Have left out the workings. Would like to know whether my findings are right or not.
Net income:
1. with free overnight delivery is $595k.
2. 20 percent off on renewals is $1380k.
3. Difference will be $785k.
Kindly advise.
November 16, 2016 at 5:48 pm #349322I repeat what I wrote in my last reply.
You must have an answer in the same book in which you found the question, and so you should know whether or not your answer is correct.
Use this forum to ask whatever is not clear to you in my lectures on in the answers to questions you attempt. This forum is not for me to give you answers or to check your answers.
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