Background-Westside Beverages is a start-up venture of 3 individuals who desire to establish a company that...

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Background-Westside Beverages is a start-up venture of 3 individuals who desire to establish a company that manufactures and resells a juicer. They have decided that their first product should be named Sunkraft (manufactured brand), due to its high margins and that there are many products that the company can add to the product mix down the road. Start-up costs including office infrastructure and initial marketing materials (branding and logos) have already been funded. Assumptions 1. Sunkraft is the first product of the Westside company. The company plans to add additional products to the product mix once they are at a break-even point. 2. The company spends $1000 per month on facilities (rent, phone, utilities, etc.) 3. The company spends $12,000 per month on salaries and related expenses. 4. The company spends $750 per month on supplies and other expenses. 5. The company's marketing budget is $1,500 per month. 6. Customers will pay shipping costs associated with delivery if they choose to have the product shipped. 7. The company produces $44 for each product (unit). This type of product is considered to be in the mid-range of the juicer market in terms of benefits. 8. The company spends $2.75 per product on packaging and labeling. 9. In order to try and capture an immediate market share, the company is planning a market-penetration pricing strategy. Westside has priced the product at $95, which is $44 less than a similar product retails for at local stores. Similar products are also sold at the local stores for between $99 and $229, depending on benefits, and at other stores in town for $69 (low end model) and $149 (mid range-model). 10. The company's space is a small storefront in a revitalized area of the city's downtown. 1. Using the break-even formula for Westside. .), calculate the monthly break-even point of sales 2. Would you recommend that Westside move forward with this product launch? Why or why not? If not, what product would you recommend that the company pursue for its initial launch? 3. What additional information would you need to make a better decision? 4. Do you believe that the initial price point of the product makes sense? Why or why not? Background-Westside Beverages is a start-up venture of 3 individuals who desire to establish a company that manufactures and resells a juicer. They have decided that their first product should be named Sunkraft (manufactured brand), due to its high margins and that there are many products that the company can add to the product mix down the road. Start-up costs including office infrastructure and initial marketing materials (branding and logos) have already been funded. Assumptions 1. Sunkraft is the first product of the Westside company. The company plans to add additional products to the product mix once they are at a break-even point. 2. The company spends $1000 per month on facilities (rent, phone, utilities, etc.) 3. The company spends $12,000 per month on salaries and related expenses. 4. The company spends $750 per month on supplies and other expenses. 5. The company's marketing budget is $1,500 per month. 6. Customers will pay shipping costs associated with delivery if they choose to have the product shipped. 7. The company produces $44 for each product (unit). This type of product is considered to be in the mid-range of the juicer market in terms of benefits. 8. The company spends $2.75 per product on packaging and labeling. 9. In order to try and capture an immediate market share, the company is planning a market-penetration pricing strategy. Westside has priced the product at $95, which is $44 less than a similar product retails for at local stores. Similar products are also sold at the local stores for between $99 and $229, depending on benefits, and at other stores in town for $69 (low end model) and $149 (mid range-model). 10. The company's space is a small storefront in a revitalized area of the city's downtown. 1. Using the break-even formula for Westside. .), calculate the monthly break-even point of sales 2. Would you recommend that Westside move forward with this product launch? Why or why not? If not, what product would you recommend that the company pursue for its initial launch? 3. What additional information would you need to make a better decision? 4. Do you believe that the initial price point of the product makes sense? Why or why not?

Answer rating: 100% (QA)

SOLUTION Using the breakeven formula calculate the monthly breakeven point of sales for Westside Breakeven point Fixed costs Sales price per unit Variable costs per unit Fixed costs 1000 facilities 12... View the full answer