Haverwood Furniture, Inc. manufactures wood furniture that sells at medium to high price points relative to other manufactures. Haverwood products are sold at 1,000 retails locations in the United States.
2007 pre-tax profit was $3.7 million on $75 million in sales. The company’s forecast of a 4% increase in 2008 sales is in line with expectations for the furniture industry as a whole. The president of the company expects increasing costs to reduce the contribution margin to 20%. He would like to attain a 5% pre-tax profit margin which would be a slight increase from the current 4.9%.
Company policy limits promotional expenditures to 5% of sales. In 2007, 4.9% of total sales were spent on promotional costs including sales and sale administration
2007 pre-tax profit was $3.7 million on $75 million in sales. The company’s forecast of a 4% increase in 2008 sales is in line with expectations for the furniture industry as a whole. The president of the company expects increasing costs to reduce the contribution margin to 20%. He would like to attain a 5% pre-tax profit margin which would be a slight increase from the current 4.9%.
Company policy limits promotional expenditures to 5% of sales. In 2007, 4.9% of total sales were spent on promotional costs including sales and sale administration