1.Satellite Imaging (SD) is considering launching a new satellite receiver that will be sold through major electronic retailers in the US. The initial investment that SD will need to invest if they develop the Xgen1 is $7.8 million. Research suggests that high-end electronic consumers are willing to pay $695 for the HD receiver/DVD recorder. The mark-up for retailers is 28% on selling price, while wholesalers earn a margin of 9%. Other data concerning the Xgen1 are as follows.

Expense

Cost

Advertising/promotion

$875,000

Overhead

$533,000

Packaging

$4.865/unit

Components

$197.56/unit

Assembly of components

$92.56/unit

Supplemental goods (manual, cables, etc)

$3.292

Calculate the following:

a.Retailer cost

b.Wholesaler cost

c.Contribution per unit

d.Contribution margin

e.Break-even unit volume

f.Necessary unit volume to achieve a $500,000 profit