Answer:
The inquiry lacks sufficient information:
The analysts were worried since not only did Porsche enter the market late, but the introduction of the Cayenne could potentially harm Porsche's standing as a producer of high-performance vehicles. In assessing the Cayenne, would you refer to the potential harm to Porsche's image as erosion?
In marketing terminology, brand erosion signifies that consumers will perceive the brand's value as diminished. Fortunately, Porsche disregarded these concerns. The Cayenne has become Porsche's largest source of revenue and profit.
Porsche is a brand typically associated with luxurious sports cars, and their most popular model, the 911, has seen very few changes over the last five decades. However, as the SUV market size expanded, their profits began to decline. Many Porsche enthusiasts dislike the Cayenne and Macan, but the reality is that they boosted total sales volumes significantly beyond expectations.
Today, Porsche is viewed more as a luxury automobile manufacturer, and interest in their products has increased. A smaller segment of consumers expressed disappointment, while the majority were satisfied.
Answer and Explanation:
a. Below is the computation of the contribution margin for each segment:
(in millions)
Details Investor Advisor Services Services
Revenue from
operations $1,681 $1,660
Plus:
Depreciation $171 $154
Contribution
Margin $1,852 $1,814
2. Next, we assess the decrease in operating income
(in millions)
Details Combined services Institutional Services
Total Revenue $9,368 $4,771
Less:
Variable expense $5,702 $2,919
($2,919 + $2,783)
Contribution
margin $3,666 $1,852
Less:
Fixed costs -$325 -$171
Net earnings $3,341 $1,681
So from the previous calculations, it shows that the net operating income has decreased by
= $3,341 - $1,681
= $1,660 million
The variable costs can be calculated as
= Service revenues minus income from operations minus depreciation expense
Depreciation refers to the reduction in an asset's value over time due to wear and tear. Calculating depreciation using the straight-line method results in $38,960 written off annually. This yields a depreciation rate of 16.34% per year. In comparison, using the double declining method results in a depreciation rate of 32.68% annually, with the first year's depreciation amount being $77,909.
