1) You are a manager for Dan's Juice Barna small distributor with 3 juice lines. You have three juices--Apple, Orange, and Pear, with the following information: Apple Orange Pear Price $2.50 per liter $2.00 per liter $3.00 per liter Unit Cost $1.00 per liter $1.00 per liter $2.25 per liter Last year Demand 50,000 liters 250,000 liters 25,000 liters 75,000 250,000 18,750 You have 3 salespeople who are paid $30,000 per year plus 10% commission on sales. You also spend an average of 5% of your total sales per year for promotion (advertising, vc etc.). Your other fixed costs are $15,000 per month. Answer the following questions: What is the contribution margin and markup for each type of juice? What was the profit/loss for last year for the company? If each of your salespeople were assigned to just one juice type (one for Apple, one for Orange and one for Pear), how much would each salesperson have to sell to cover their own fixed expenses (ignoring the other fixed expenses)? How many total liters of juice would you have to sell to break-even given you expect similar ordering this year? Note: this is not a question about break even for each juice-it is a question about the total liters for all juices combined. Cannabilization problem 2) Your company is considering adding a new model to its existing product line. Currently, you sell two models, Good and Best. You are considering adding a new model-Better to the product line. You have the following data: Model Good Best Better Selling Price $3500 $6700 $5300 Variable Cost $2700 Demand last year 7000 units 3750 units New this year $3700 You have asked the sales department for a forecast for the upcoming year and they have suggested that if the new model is introduced, sales for the Better model would be expected to be about 5000 units. This would include some cannibalization from the other two models, but they are not sure how much. All they would commit to was that they would estimate a decrease in sales for the Good model somewhere between 8% and 9%. For the Best model, they estimate the decrease caused by adding the Better model to be somewhere between 5% and 10%. In addition, manufacturing suggests the company will incur an additional $2,000,000 in fixed costs to adapt the current production line to the new model. Finally, your Research & Development department has told you that they spent $2,000,000 on product development for the Best model, and that 50% of that technology can be incorporated into the better Model. Should you add the Better model? Why or why not? 3) Your company manufactures candy that sells in small bags through pharmacies like Walgreens. You sell to a wholesaler who then sells to Walgreens. Demand for your candy is 1,000,000 bags per year through Walgreens. Your manufacturing cost is $.50 per bag and Walgreens sells each bag for $2.00. Walgreens has a contribution margin of 25% and the wholesaler has a contribution margin of 20%. a. What is your selling price to the wholesaler and your contribution margin? b. If you decided to add a manufacturer coupon with a face value of $.20 and you expected the redemption rate to be 1 in 10, how many additional units would you have to sell to cover the coupon next year? c. Would the wholesaler be willing to cover half of the cost of the coupon if the coupon was expected to increase the number of units sold next year by 100,000 additional units