1. Video Concepts INC VCI markets video equipment and film through a variety of retail outlets. presently VCI is faced with a decision as to whether it should obtain the distribution rights to an unreleased film titled Touch of Orange. If this file Is distributed by VCI directly to large retailers, VCI's investment in the project would be $150,000. VCI estimates the total market for the film to be 100,000 units. Other data as follows....

Cost of distribution rights for film $125,000

Label Design $5,000

Package Design $10,000

Advertising $35,000

Reproduction of copies (per 1,000) $4,000

Manufacture of labels and packing (per 1,000) $500

Royalties (per 1,000) $500

VCI's suggested retail price for the film is $20 per unit. The retailer's margin is 40 percent.

a. What is VCI's unit contribution and contribution margin?

b. What is the breakeven point in units? in dollars?

c. What share of the market would the film have to achieve to earn a 20 percent return on VCI's investment the first year?