Problem

BMW decided to invest $\$ 150,000$ in a new promotional campaign. The contribution margin for the campaign is $25 \%$. The ROMI for the campaign is $60 \%$. What is the incremental revenue? $\$ 600,000$ $\$ 960,000$ $\$ 360,000$ $\$ 90,000$

Solution

Step 1 :Given values are Return on Marketing Investment (ROMI) as 60% or 0.60 in decimal form and the cost of the campaign as $150,000.

Step 2 :We need to calculate the incremental revenue, which is the additional revenue that BMW expects to generate from the campaign.

Step 3 :The formula to calculate incremental revenue is \( \text{Incremental Revenue} = \text{ROMI} \times \text{Cost of Campaign} \).

Step 4 :Substituting the given values into the formula, we get \( \text{Incremental Revenue} = 0.60 \times 150000 \).

Step 5 :Solving the above expression, we get the Incremental Revenue as $90,000.

Step 6 :So, the additional revenue that BMW expects to generate from the campaign, given a ROMI of 60%, is $90,000.

Step 7 :Final Answer: \(\boxed{90000}\).

From Solvely APP
Source: https://solvelyapp.com/problems/a6rCMEE3aK/

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