Amazon Echo

Retail Selling Price

$50.00

Retailer's Margin

25%

Jobber's Margin

15%

Wholesaler's Margin

20%

Direct Factory Labor

$3 per unit

Raw Materials

$2 per unit

Administrative Overhead

$2 per unit (at a 100,000 unit volume level)

Salespersons' Commissions

20% of manufacturer's selling price

Sales Force Travel Costs

$100,000

Advertising

$250,000

New Equipment Needed

$200,000 (to be depreciated over 5 years)

R&D spent up to now

$600,000

R&D to be spent this year

$100,000 (to be amortized over 5 years)

Total Market

500,000 units

Current Yearly Sales

200,000 units

a)[3 pts] What is Amazon's (the manufacturer) selling price?

b)[3 pts] What is Amazon's variable costper unit?

c)[4 pts] What is Amazon'stotalfixed cost?

d)[2 pts]What is thecontribution per unitfor the Amazon?

e)[3 pts]What is thebreak-even volume in units?

f)[2 pts]What is the break-even volumein dollars?

g)[3 pts] Whatmarket sharedoes Amazon need to break-even?

h)[2 pts]What is thecurrent total unit contribution?

i)[2 pts] What is the currentbefore-tax profitof the Amazon Echo brand?

j)[2 pts] Whatmarket sharemust the Amazon Echo brand obtain to contribute a before-tax profit of $2,000,000?