#1 A regional house paint manufacturer sells in an area of 2.5 million population. The company targets the DIY consumer likely to purchase paint within one year, which the company believes represents about 9% of the population. The company distributes through 550 of the 1,000 stores in the area that sell paint at retail. The average DIY paint buyer makes a purchase of paint once per year at what would be a wholesale selling price of $75 for the firm. Use the chain ratio method to calculate the annual sales potential for the regional paint manufacturer.

#2 A company sells a product for $8 per unit with $3 of variable costs per unit. Market demand is 50,000 units. If the company desires a gross profit of $100,000 for the year, what market share will be needed? [solve by re-arranging the formula: gross profit = (market demand)(market share)(unit selling price minus unit variable cost)]

#3 If the grocer purchases yogurt wholesale for $1.40 per unit and desires a profit of 20% based on selling price, what will be the price the consumer is asked to pay at retail?

#4 A manufacturer of toothbrushes sells the item for $0.78 per unit and has variable cost per unit of $0.23. Sales volume at this price is 800,000 units per year. If the manufacturer lowers the selling price to $0.65, how many units would the manufacturer need to sell to equal the annual contribution dollars under the old selling price?

#3 Zifer Farms, currently produces and sells plain (no sugar added) yogurt in individual plastic containers (16 oz with a re-closable lid) directly to a grocery chain (no wholesaler). Zifer is thinking of introducing a vanilla flavored yogurt (sugar added) to their product line. However, the company estimates that some of the end consumers for the plain yogurt may switch to the new vanilla offering. Look at the information in the table below and answer the following questions.

	Unit Selling Price	Current Volume	Estimated Future Volume	Unit Variable Cost	Contribution ($) Per Unit
Plain yogurt	$1.40	500,000 units	300,000 units	$1.13
Vanilla yogurt	$1.48	Zero	300,000 units	$1.23

a) What is the current total contribution dollars for the firm selling just the plain yogurt?

2. What is the future total contribution dollars for the firm selling both products?

3. Disregarding any incremental fixed expense associated with the introduction of the new yogurt, what would be your recommendation to the company on whether to proceed with the new product?