1. What is VCI's $ contribution margin per DVD unit sold?

2. What is VCI's % contribution margin per unit sold?

3. How many units will VCI have to sell to break even?

4. If VCI sells 100K units, what will their $ profit be?

5.

VCI is considering a shift to digital distribution, replacing DVD production with digital downloads. Calculate the breakeven units (downloads) required given the following data:

• Lower retail price of $15.00
• Digital distribution retailers (iTunes, Amazon) will require a 25% margin
• VCI will sill need to pay distribution rights for the film, as well as royalites for each download.
• VCI will still need to design a digital "poster" for the film, costing $5,000.
• VCI will not need to produce DVDs, design/manufacture packaging, or ship DVDs
• As there will not be brick-and-mortar retail outlets, a higher level of advertising will be necessary: $50,000.00

Video Concepts, Inc. (VCI) markets independently produced films on DVDs through a variety of video retail outlets. VCI is deciding whether they should obtain the rights to a film titled Burnt Orange Forever. VCI estimated the total market for the film will be 100,000 units. Other data available: $100,000.00 Distribution rights for the film: DVD Label design: $5,000.00 DVD Package design: Advertising: Reproduction of copies: Manufacture of packaging: Royalties: DVD Shipping Costs: $10,000.00 $35,000.00 $4,000.00 per 1,000 units $750.00 per 1,000 units $500.00 per 1,000 units $1 per unit VCI's suggested retail price for the film is $20/unit and the retailer's margin is 50%. There are no other channel intermediaries such as wholesalers to consider.) Video Concepts, Inc. (VCI) markets independently produced films on DVDs through a variety of video retail outlets. VCI is deciding whether they should obtain the rights to a film titled Burnt Orange Forever. VCI estimated the total market for the film will be 100,000 units. Other data available: $100,000.00 Distribution rights for the film: DVD Label design: $5,000.00 DVD Package design: Advertising: Reproduction of copies: Manufacture of packaging: Royalties: DVD Shipping Costs: $10,000.00 $35,000.00 $4,000.00 per 1,000 units $750.00 per 1,000 units $500.00 per 1,000 units $1 per unit VCI's suggested retail price for the film is $20/unit and the retailer's margin is 50%. There are no other channel intermediaries such as wholesalers to consider.)