Submit the completed Marketing Math Calculations worksheet. Also, please submit a separate Word document in which you answer the following questions:

If the retail price is set at $1.00, what effect does increasing retail and wholesale margins have on the manufacturer's selling price? Explain why this is the case.

Define unit contribution in your own words. Is a high or low unit contribution preferable for profitability? Justify your answer.

How do increases in retail and wholesale margins (again, with a fixed retail price) affect the unit contribution? Be sure to explain why.

If any of the fixed cost factors increases, what happens to 1) the number of units the company needs to sell to break even and 2) the market share needed to break even? If fixed costs increase, is it good, bad, or not important? Explain your answer.

Which change (increase or decrease) in the following factors increases the impact on earnings and why?

retail margin/unit

brand market share

advertising budget

Many marketing decisions have multiple implications. For example, while increasing price improves profit per unit, too large a price increase can decrease unit sales and ultimately decrease overall profit. Given this type of tradeoff, explain how changes to the three factors mentioned in the previous question might conflict with each other in terms of strategy to increase the profit impact.

Tips for working with the spreadsheet:

The sheet has been set up so that the initial data values remain at the top while you scroll down the rest of the sheet. For this exercise, you should only edit the initial data values, not the formulas in the cells below.

Read the cell comments to the right of cells C25, C32, and C40 for tips on understanding the formulas.

I then completed the spreadsheet.

Marketing arithmetic exercise calculations
Initial data:
Margin Structure Factors:	Retail price:	$ 1.00		Market factors:	Total units on the market:	20,000,000
	Retail Margin/Unit:	33%			Market share of brand X:	24%
	Wholesale Margin/Unit:	12%
Variable Cost Factors:	Variable manufacturing cost/unit:	$ 0.09		Fixed cost factors:	Fixed manufacturing costs:	$ 900,000
	Shipment etc./Unit:	$ 0.02			Advertising budget:	$ 500,000
	Commissions:	10%			Puncture. Mgr. Salary:	$ 35,000
Question 1: What is the unit contribution for Brand X?
Key formulas:
Wholesale Price = Retail Price x (100% - Retail Margin/Unit)
Manufacturer's Selling Price = Wholesale Price x (100% - Wholesale Margin/Unit)
Commissions/Unit = Commission x Manufacturer's Selling Price
Contribution per Unit = Manufacturer's Selling Price - Variable Costs/Unit
Step 1: Determine the Manufacturer's Selling Price
	Wholesale price:	$ 0,67
	Manufacturer's selling price:	$ 0,59
Step 2: Determine Total Variable Costs
	Variable manufacturing cost/unit:	$ 0.09
	Shipment etc./Unit:	$ 0.02
	Commission/Unit:	$ 0.06
	Total variable costs per unit:	$ 0.17
Step 3: Determine Unit Contribution
	Unit contribution:	$ 0.42
Question 2: What is the break-even point of brand X?
Key Formula: Balancing Units = Fixed Costs divided by Unit Contribution
	Fixed costs:	$1,435,000.00
	Balancing Units:	3.411.468
Question 3: What market share does brand X need to break even?
Key Formula: Equilibrium Market Share = Equilibrium Units divided by Total Units in the Market
	Equilibrium market share:	17%
Question 4: What is the profit impact of brand X?
Key formulas:
Unit Volume = Total Units in the Market x Market Share
Profit Impact = (Unit Volume x Unit Contribution) - Fixed Costs
	volume unit:	4,800,000.00
	Earnings Impact:	$ 584,072

Answer rating: 100% (QA)

Answer 1 Effect of Increasing Retail and Wholesale Margins on Manufacturers Selling Price Increasing retail and wholesale margins will ultimately lead to a higher manufacturers selling price This is b... View the full answer