Business: Revenue and Target Gross Margin

Topics: Los Angeles, Revenue, Cash flow Pages: 2 (408 words) Published: November 24, 2012
Additional facts about this case:

1. CHP is believed to be close to a long-term contract to supply parts to Medit, a giant construction company with excellent government contracts in southern France and nearby Euro countries.

2. Mission’s price for the coupling in questions (PT40) is $1.26, FOB, Los Angeles. The target gross margin for exports is 30%

FOB$1.26 (location Los Angeles)
COGS$ .88 (Fixed)
GTM $0.38
CIF$1.3627= $1.36

FOB (1.05) (1.03)= 1.0815

FOB $1.33- $.88= $.45

$1.54- $.88=$.66

Target (Gross Margin for exports 30%)

3. Mission has a reputation for high prices in the US, and running the factory below capacity limits will raise costs further.

4. International sales missed forecast for 1Q03 by 7%. 2Q03 forecast is $4.3 million, but early customer response is not encouraging. International sales are now 20% below target.

5. Key account sales force compensation: 70% salary, 15% bonus on sales quotas, 15% bonus on profitability targets.

6. In 4Q02, Mission’s sales to CHP were $83k – 18% of CHP’s flexible couplings purchases.

Questions to answer:

1. Write a short, one-paragraph summary of the facts in this case.

Mission Rubber Technology Corp. is a company that creates an industrial product. The traffic has created trouble with CHP. Shipping has costs $11,000 for CHP because Mission Rubber Technology error. Damages occur often. The issues need to be addressed be Mission Rubber Technology and CHP is late on their payments. Late payment causes a lack of losing customers and cash, which can also cause a company to fail.

Sales 20012002
Increased 165/114= 1.44 percent growth

The American market has become weak domestically and slowing down which businesses tend to lose assets. Sales and productivity decreases causing the growth of the business to also decrease. One of alternative is to globalization seeking for new business. An...
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