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SUMMARY OF THE BUSINESS POLICY GAME COSTS — Year 3, Quarter 1
(Costs change over time because of inflation and changes made by management.)
Finance Expenses
Bank loan: Interest at the short-term interest rate during the quarter the loan is issued
Bonds: Existing bonds, at 10% annual interest, new bonds at long term interest rate in quarter of issue
Interest paid quarterly. Bonds\ are callable at a 5 percent call premium
Common stock: Issue price determined by formula in text
Income tax: 39% of net income; paid quarterly
Value Added Tax in N/P/S: 10% of net sales to customers, paid quarterly
Marketing Expenses
Salespeople:
Salaries and commissions:
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$3,000 or Dn, Rp or Ps 8971 per quarter + 20 cents or 0.60 Lc per unit
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Training:
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$10,000 or 36,000 in local currency per trainee
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Moving expense:
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$5,000 or 30,000 in local currency per salesperson transferred
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Severance expense:
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$5,000 or 30,000 in local currency per salesperson fired
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Inventory storage: In-plant warehouse: 10 cents or Dn, Rp, or Ps 0.60 per unit up to 300,000 units
Public warehouse: 30 cents or Dn, Rp or Ps 1.80 per unit
Transportation Expense:
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Cost per unit in dollars
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Shipments from:
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To:
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convert to Lc at current rates
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Sales office or plant
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Customer in same area
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$0.10
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Plant (Merica)
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Sales office in other Merica area
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$0.60
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Plant (Merica)
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Foreign sales office
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$0.90
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Plant (Foreign)
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Merica sales office
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$0.90
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Marketing Research
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Competitive Advertising
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$40,000
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Sales Force Comparison
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$20,000
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Consumer Preference I
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$60,000
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Consumer Preference II
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$80,000
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Sales Force Compensation
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$40,000
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General Selling Expense
Each Merica area:
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$37,500 + $4,000 x number of salespeople + $0.20 x number of units sold
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N/P/S:
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Lc 225,000 + Lc 24,000 x number of salespeople + Lc 1.20 x number of units sold
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