Far East Flora has had some success with gifting on special occasions and would like to try a special Valentine’s Day offering in Cold Storage to increase awareness of their offerings. They are looking to launch a floral bouquet with 6 red roses with an attached chocolate box containing 6 heart-shaped chocolates from Fossa Chocolates as a trial for 6 months. This offering is exclusive to Cold Storage during the trial period.
Cold Storage is planning a markup of 25% for the product.
If Far East Flora would like to sell the Valentine’s Day offering at retail for $24.99, determine the following metrics:
What will Far East Flora’s selling price for the Valentine’s Day offering have to be, assuming the above-stated markup for the retailer?
How many units will Far East Flora need to sell to break even?
How many units will Far East Flora need to sell to Cold Storage to earn a target profit of $20,000?
If Far East Flora achieves the sales volume required to earn the target profit, what will be its profit %?
Do you think Far East Flora should proceed with this venture? Why or why not?
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