Break Even Analysis

Shannons distributes its beer through a wholesaler, Miller of Denton. The retail selling price for a six pack of its typical craft beer is $12.00. The retailers cost per six pack is $8.00. The wholesaler sells the beer to the retailer for this price. Shannons sells a six pack to the wholesaler for $5.40. Shannons variable costs of production, packaging, and distribution are $3.60 per six pack. Shannons has the following annual fixed operating and marketing costs: Marketing Costs $53,469 Consumer Advertising $39,974 Trade Promotion $30,000 Sales Promotion $18,000 What is Shannons annual break-even in six packs of beer sold?

Question 2 Question 210 pts Given the above information in Q1, Shannons wants to increase its sales to retailers by 20% in the next year. Management estimates that the incremental promotion program required to generate sufficient demand to boost sales by 20% will be: Personal Selling Costs $ 60,000 (exclusive of commission) Consumer Advertising $ 59,538 Trade Promotion $ 37,019 Sales Promotion $ 25,000 Shannons will need to hire an additional salesperson (paid a salary and commission) and provide some added administrative support. The salespersons salary plus administrative support will cost about $60,000 per year. The salespersons commission will be the equivalent of $0.05 per six-pack sold. Unit variable costs, exclusive of the salesperson's commission, are the same as in Q1. The incremental costs of consumer advertising, trade promotion, and sales promotion necessary to support sales in the new market will be substantial, as indicated in the table above. How many six-packs must be sold to break even on the incremental costs that are anticipated?

Question 3 Question 310 pts Lets modify the scenario from Q1 and Q2 a bit. Management estimates that the incremental promotion program required to generate sufficient demand to boost sales by 20% will need to be: Marketing Costs $ 60,000 (exclusive of commissions) Consumer Advertising $ 56,503 Trade Promotion $ 43,125 Sales Promotion $ 25,000 The total market for craft beer sold in six-packs is about 2,500,000 six packs per year. How much market share will Shannons need to acquire in order to break even on the incremental costs that are anticipated? Express your answer in percent format to two decimal places. For example, 5.00 for five percent or .50 for one-half of one percent. Do not include the percent sign.