1. Your new company is planning to make and sell customized mailboxes. You have set startup costs of $2046. Each mailbox costs you $34 to make. If you plan to sell your mailboxes for $49.50, how many must you make and sell to break even? Explain the how you determined the answer.

2. If the retail price is fixed at $1.00, what effect does increasing the retail and wholesale margins have on the manufacturer's selling price? Explain why this is the case.

3. Define unit contribution in your own words. Is a high or low unit contribution preferable for profitability?

4. How do increases in the retail and wholesale margins (again, with a fixed retail price) affect the unit contribution? Why?

5. If you increase any of the fixed cost factors, what happens to the number of units the company needs to sell to break even? To the market share necessary to achieve breakeven?.

6. What change (increase or decrease) to the following factors increases the profit impact?

Decreasing retail margin/unit increases profit impact.

Increasing brand market share increases profit impact.

Decreasing advertising budget increases profit impact.

7. Many marketing decisions have multiple consequences. For example, while increasing price improves profit per unit, too large a price increase may decrease unit sales, ultimately decreasing profits overall. Keeping this kind of tradeoff in mind, explain how changes to the three factors mentioned in the prior question could potentially conflict with one another in terms of strategy for increasing the profit impact.