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Hank Alger has just become product manager for Brand K

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Question

Hank Alger has just become product manager for Brand K. Brand K is a consumer product with a retail;price of $1.00. Retail margins on the product are 23%, while wholesalers have a 10% mark-up.;Variable manufacturing costs for Brand K are $0.10 per unit. Fixed manufacturing costs = $800,000.;The advertising budget for Brand K is $500,000. The Brand K product manager?s salary expenses total;$35,000. Brand K?s salespeople are paid entirely by commission, which is 10%. Shipping costs;breakage, insurance, and so forth are $0.05 per unit.;In 20x1, Brand K and its direct competitors sell a total of 20 million units annually, Brand K has 25%;of this market. In 20x1, what is (please write your answer on the line after the question);1. The unit contribution for Brand K?;2. Brand K?s break even point? (round off answer to the nearest thousand);3. Brand K?s profit? (ditto);4. The market share Brand K needs to break even?;In 20x2, industry demand is expected to increase to 25 million units per year. Mr. Alger is;considering raising his advertising budget to $1 million. In 20x2, if the advertising budget is raised;5. How many units will Brand K have to sell for it to make the same profit as in 20x1?

 

Paper#28094 | Written in 18-Jul-2015

Price : $37
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