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##### Product X is a consumer product with a retail price of $9.95.

**Description**

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**Question**

Product X is a consumer product with a retail price of $9.95. Retailer?s margins on the product;are 40% (based on the selling price to consumers) and wholesaler?s margins are 8% (based on the;selling price to retailers). The size of the market is $300,000,000 annually (based on retail sales);product X? share (in dollars) of this market is 17.3%.;The fixed costs involved in manufacturing Product X are $1,400,000 and the variable;costs are $0.86 per unit. The advertising budget for Product X is $2,000,000. Miscellaneous;variable costs (e.g., shipping and handling) are $0.04 per unit. Salespeople are paid;entirely by a 12% commission based on the manufacturer?s selling price. Product manager?s;salary and expenses are $90,000.;Assuming that you are the manufacturer, calculate the following;1. What is the unit margin (contribution) for Product X (in $)?;2. What is Product X?s break-even volume?;3. What market share (based on retail sales) did Product X need to break even?;4. What is Product X?s (annual) net profit?;5. Calculate the increase in sales over the current volume needed to maintain the;current profit level if the manufacturer doubles its advertising expenditures.;6. Calculate the increase in sales over the current volume needed to maintain the;current profit level if the manufacturer lowers its price by 25%.;7. Calculate the increase in sales over the current volume needed to maintain the current;profit level if the manufacturer increases the sales force?s commission to 15%.;Additional Requirements

Paper#79558 | Written in 18-Jul-2015

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