Breakeven Analysis

Please assume that you are the manufacturer in answering the questions below.

Jennifer Brown has just become product manager for Brand X. Brand X is a consumer product with a retail price of $ 1.00. Retailer's margins on the product are 40%,based on the final sellingprice (40% of the price the retailer charges to consumers). Brand X and its direct competitors sell a total of 20 million units annually; Brand X has 25% of this market.

Variable manufacturing costs for Brand X are $0.15 per unit. Fixed manufacturing costs are $900,000. The Advertising budget for Brand X is $500,000. The Brand X product manager's salary and expenses total $35,000, breakage, insurance, and so forth are $0.04 per unit.

1.What is the price you (manufacturer) charge to the retailer? (1.5 pts)