Business
Business, 24.04.2020 20:11, sassy11111515

Horatio Alger is the product manager for Brand X, a consumer product with a retail price of $1.20. Retail margins are 35% while wholesalers take an 11.5% margin.
Brand X and its direct competitors sell a total of 18 million units annually and Brand X has 22% of this market. Variable manufacturing costs for Brand X are $0.08 per unit and fixed manufacturing costs are $950,000.
The advertising budget for Brand X is $550,000. The Brand X product manager's salary and expenses total $40,000. Salespeople are paid entirely by a 10% commission. Shipping costs, breakage, insurance and other misc. expenses are $0.03 per unit.
1) What is the unit contribution for Brand X? (This is a critical calculation that if incorrect will render all subsequent calculations using it also wrong)
a. If the retail price is $1, what is the price the retailer pays per unit to the wholesaler?
b. What is then the price the wholesaler pays the manufacturer (Horatio’s company)?
c. Which of the costs of Brand X are variable with respect to the number of units sold? Which are fixed and therefore not variable with units sold?

2) What is Brand X’s break-even point, both in units and in dollars?

3) What market share does Brand X need to break even?

4) What is Brand X’s profit impact?

5) Industry demand is expected to increase to 23 million units next year. An increase in the ad budget to $1 million is being considered.
a. If the ad budget is raised, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell in order for it to achieve the same profit impact it did this year?
c. What will Brand X’s market share have to be next year for its profit impact to be the same as this year?
d. What will Brand X’s market share have to be for it to have a $1 million profit impact?

6) Upon reflection, the product manager decides against increasing the ad budget for the coming year. Instead, he things sales would be increased more if the company gives retailers an incentive to promote Brand X, by temporarily raising their margins from 33% to 40%. The margin increase would be achieved by lowering the price of the product to retailers. Wholesaler margins would continue to remain at 12%.
a. If retailer margins are raised to 40% next year, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell to achieve the same profit impact next year as it did this year?
c. What would be Brand X’s market share have to be for its profit impact to remain at this year’s level?
d. What would Brand X’s market share have to be for it to generate a profit impact of $350,000?

answer
Answers: 2

Other questions on the subject: Business

image
Business, 22.06.2019 08:30, ansarishaheer2888
Sonic corp. manufactures ski and snowboarding equipment. it has estimated that this year there will be substantial growth in its sales during the winter months. it approaches the bank for credit. what is the purpose of such credit known as? a. expansion b. inventory building c. debt management d. emergency maintenance
Answers: 3
image
Business, 22.06.2019 11:30, kimjp56io5
Amano s preguntes cationing to come fonds and consumer good 8. why did the u. s. government use rationing for some foods and consumer goods during world war ii?
Answers: 1
image
Business, 22.06.2019 19:00, makaylahunt
James is an employee in the widget inspection department of xyz systems, a government contractor. james was part of a 3-person inspection team that found a particular batch of widgets did not meet the exacting requirements of the u. s. government. in order to meet the tight deadline and avoid penalties under the contract, james' boss demanded that the batch of widgets be sent in fulfillment of the government contract. when james found out, he went to the vice president of the company and reported the situation. james was demoted by his boss, and no longer works on government projects. james has a:
Answers: 3
image
Business, 22.06.2019 19:20, Gabby2581
Win goods inc. is a large multinational conglomerate. as a single business unit, the company's stock price is estimated to be $200. however, by adding the actual market stock prices of each of its individual business units, the stock price of the company as one unit would be $300. what is win goods experiencing in this scenario? a. diversification discount b. learning-curveeffects c. experience-curveeffects d. economies of scale
Answers: 1
Do you know the correct answer?
Horatio Alger is the product manager for Brand X, a consumer product with a retail price of $1.20. R...

Questions in other subjects:

Konu
Chemistry, 26.05.2021 19:30
Konu
History, 26.05.2021 19:30
Konu
Mathematics, 26.05.2021 19:30