Bob Smith has just become product manager for Brand X. Brand X is a consumer product with a retail price of $59.99. Retail margins on the product are 25%, while wholesalers take a 18% margin (both trade margins are expressed in terms of selling price).

Variable manufacturing costs for Brand X are $11.70 per unit. Fixed manufacturing costs are $2,500,000. The marketing budget for Brand X is $3,000,000. The Brand X product managers salaries amounts to $1,000,000. Salespeople are paid entirely by commission (12% per unit sold the commission is based on manufacturing price). Other miscellaneous costs (e.g. insurance, manufacturing defects, etc.) are $8.65 per unit.

Brand X and its direct competitors sell a total of 3.5 million units annually; Brand X has 27% of this market.

Industry demand is expected to decrease by 500,000 units next year. Mr. Letterman is considering increasing marketers compensation to compensate for their hard work during this challenging time, which would result in a $200,000 increase in managerial salaries and a 1% increase in commission for sales representatives i.e. new commission is 13% on manufacturing price (while all else remains the same).

1) How many units will Brand X have to sell in order for it to achieve the same profit impact that it did this year?

2) What will Brand X's market share have to be next year for its profit impact to be the same as this year?