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Can you please explain 2. Video Concepts, INC. VCI markets video equipment and film through a variety of retail outlets. Presently, VCI is faced with
Can you please explain
2. Video Concepts, INC. VCI markets video equipment and film through a variety of retail outlets. Presently, VCI is faced with a decision as to whether it should obtain the distribution rights to an unreleased film titled Touch of Orange. If this film is distributed by VCI directly to large retailers, VCI investment in the project would be $150,000. VCI estimates the total market for the film to be 100,000 units. Other data available are as follows: Cost of distribution rights for film Label design Package design Advertising Reproduction of copies (per 1000) Manufacture of labels and packaging (per 1000) Royalties (per 1000) $125,000 $5,000 $10,000 $35,000 $4,000 $500 $500 VCI suggested retail price for the film is $20 per unit. The retailer's margin is 40%. a. What is VCI's unit contribution and contribution margin? b. What is the break-even point in units? In dollars? c. What share of the market would the film have to achieve to earn a 20% return on VCI's investment the first yearStep by Step Solution
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