Bob Smith has just become a product manager for Brand X. Brand X is a consumer product with a retail price of $59.99. Retail margins on the product are 25%, while wholesalers take an 18% margin (both trade margins are expressed in terms of the selling price).

Variable manufacturing costs for Brand X are $11.70 per unit. Fixed manufacturing costs are $2,500,000. The marketing budget for Brand X is $3,000,000. The Brand X product managers’ salaries amount to $1,000,000. Salespeople are paid entirely by commission (12% per unit sold – the commission is based on manufacturing price). Other miscellaneous costs (e.g. insurance, manufacturing defects, etc.) are $8.65 per unit.

Brand X and its direct competitors sell a total of 3.5 million units annually; Brand X has 27% of this market.

1. What is the unit contribution for Brand X?

2. What is Brand X's break-even point?

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

4. What is Brand X's profit impact?

Answer rating: 100% (QA)

A Wholesaler price to the retailer 4499 Manufacturer price to wholesaler 3689 Less V... View the full answer