The retail price for a BigBen digital wall clock is $75.00. Retail margins on the product are
Question:
The retail price for a BigBen digital wall clock is $75.00. Retail margins on the product are 30%, while wholesalers take a 10% margin. BigBen and its direct competitors sell a total of 200,000 units annually and BigBen has 30% of this market.
Variable manufacturing costs for the BigBen digital lamp are $8 per unit. Fixed manufacturing costs are $800,000.
The advertising budget for BigBen is $400,000. The product manager's salary and expenses total $30,000. Salespeople are paid by a 5% commission of the manufacturer's selling price. Shipping costs, breakage, insurance, and so forth are $4 per unit.
a. What is the wholesaler's selling price? (2 points) b. What is the manufacturer's selling price? (2 points)
c. What is the unit contribution for BigBen? (6 points)
d. What is the total fixed cost? (4 points)
e. What is the break-even point? (3 points)
f. What market share does BigBen need to break even? (3 points)
g. What is the profit for BigBen? (5 points)