2 Company Overview Compass Pharma is a US-based pharmaceutical manufacturer. The company owns a plant in the United States that is active in serving US customers through pharmacies, and owns a plant in South America, which is lying idle. What do you need to do? a. You will first need to project the revenue for Compass Pharma through a market-sizing exercise. You will need to document your steps, making assumptions as necessary. b. Once you have done the market-sizing exercise, you will need to determine whether operating the plant in South America makes business sense. You may use the following template or any other framework of your choice to arrive at this decision. # Particulars US South America 1 Revenue per unit (this should come from your market-sizing exercise) 2 Labour costs 0.10 0.05 3 Raw materials 0.10 0.05 4 Transportation 0.05 0.20 5 Total cost per unit (2+3+4) 0.25 0.30 6 Contribution margin per unit (1-5) 7 Production capacity 50,000,000 15,000,000 8 Maximum required production (this should come from your market-sizing exercise) 9 Total Contribution (6 X lower of 7 and 8) 10 Total Fixed Costs 5,000,000 4,000,000 11 Profit (9-10)