Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A manufacturer has developed a new lawnmower. The lawnmower, called CutterX, will have a strong 8-horse power engine, will cut grass and be able to
A manufacturer has developed a new lawnmower. The lawnmower, called CutterX, will have a strong 8-horse power engine, will cut grass and be able to sow grass seeds as well if needed CutterX will be introduced using a mass advertising campaign. Management has decided to spend $2,500,000 on advertising Cutter X in the first year. Other fixed costs (overhead) are projected to be $1,500,000 per year. The unit variable costs to produce one lawnmower include $200 for materials and $100 for direct labor. The Manufacturer's selling price to the wholesaler is set at $500 per lawnmower. The wholesaler wishes to achieve a profit margin of 25% based on his selling price to the retailer. And the retailer wishes to achieve a profit margin of 30% based on his own selling price to the final consumer. Given the aforementioned information, answer the questions below. To avoid losing any points, you must show all workings, line by line, how you arrived at your answers, as well as all formulas you used in your calculation. (a). What is the break-even point unit volume in the first year for the Manufacturer? (5 points) (b). What is the net profit for the Producer if 30,000 units are sold? (5 points) (c). How many units need to be sold for the Manufacturer to achieve a profit of $3,000,000 ? ( 5 points) (d). Calculate the price that the wholesaler will charge the retailer to achieve his set profit margin. Give your answer to two places of decimal. (5 points) (e). Calculate the price that the retailer will charge the final consumer to achieve his set profit margin. Give your answer to two places of decimal. ( 5 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started