Calculate the following: A. Contribution per CD unit [1] B. Break-even volume in CD units and dollars [2] C. Net profit if 2.5 million CDs are sold [1] D. Necessary CD unit volume to achieve a $1,500,000 profit [I] Coca-Cola sells packs of its soft drink products through a variety of retailers. Currently, Coca-Cola is in a dilemma as to if it should obtain the distribution rights to a secret, unreleased soft drink. If Coca-Cola distributes this soft drink directly to large retailers, its initial costs in the project would be $235,000. Coca-Cola estimates the market for the soft drink is 350,000 units. Additional data includes: 2. Cost of distribution rights for the soft drink Label design Package design Advertising Reproduction of the soft drink (per 1,000 units) Manufacture of labels and packing (per 1,000 units) Royalties (per 1,000 units) $185,000 $2,000 $7,000 $33,000 $5,200 $1,500 $1,000 Coca-Cola's suggested retail price for the soft drink is S 13.00 per unit. The retailer's margin is 25%. A. What is Coca-Cola's unit contribution and contribution margin? [2] B. What is the break-even point in units? In dollars? [2] C. What share of the market would the soft drink have to achieve to earn a 30% return oft Coca-Cola's investment in the first year? [2) A supervisor for McDonald's is reviewing price and promotion alternatives for two products: Big Mac and Quarter Pounder 3. Calculate the following: A. Contribution per CD unit [1] B. Break-even volume in CD units and dollars [2] C. Net profit if 2.5 million CDs are sold [1] D. Necessary CD unit volume to achieve a $1,500,000 profit [I] Coca-Cola sells packs of its soft drink products through a variety of retailers. Currently, Coca-Cola is in a dilemma as to if it should obtain the distribution rights to a secret, unreleased soft drink. If Coca-Cola distributes this soft drink directly to large retailers, its initial costs in the project would be $235,000. Coca-Cola estimates the market for the soft drink is 350,000 units. Additional data includes: 2. Cost of distribution rights for the soft drink Label design Package design Advertising Reproduction of the soft drink (per 1,000 units) Manufacture of labels and packing (per 1,000 units) Royalties (per 1,000 units) $185,000 $2,000 $7,000 $33,000 $5,200 $1,500 $1,000 Coca-Cola's suggested retail price for the soft drink is S 13.00 per unit. The retailer's margin is 25%. A. What is Coca-Cola's unit contribution and contribution margin? [2] B. What is the break-even point in units? In dollars? [2] C. What share of the market would the soft drink have to achieve to earn a 30% return oft Coca-Cola's investment in the first year? [2) A supervisor for McDonald's is reviewing price and promotion alternatives for two products: Big Mac and Quarter Pounder 3
