Case 7 Atlas Publishers sells magazine subscriptions. Its managers are considering a large promotional campaign...
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Accounting
Case 7
Atlas Publishers sells magazine subscriptions. Its managers are considering a large promotional campaign in which it will award prizes of P10 million. Other costs associated with campaign follow:
Television time = 4,400,000
Fee to broadcasters TV = 700,000
Mailing = 5,300,000
Total = 10,400,000
Atlas plans to mail 20 million packages containing entry blanks and forms for subscribing to magazines. Atlas receives 25% of total subscription revenue. Experience indicates that about 15% of those receiving a package take out one or more subscriptions. The average subscription revenue from a respondent is P35. (20 pts)
Required:
1) What profit will Atlas earn if the campaign meets all expectations?
2) What is the break-even point for the campaign expressed as a response rate, assuming that each respondent orders P35 in magazines subscriptions? Present analysis.
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