• Coca-Cola is considering expanding its beverage line with a new product and has provided the following financial projections:
  • Development Costs: $500 million
  • Marketing Expenses: $300 million
  • Estimated Annual Sales: $2 billion
  • Variable Costs: $1 billion annually
  • Fixed Costs: $400 million annually

• Requirements:
  1. Calculate the break-even point in sales dollars for the new beverage product.
  2. Prepare an income statement for the first year of sales.
  3. Analyze the contribution margin ratio for the new beverage product.
  4. Discuss the strategic benefits of the new product for Coca-Cola’s portfolio.
  5. Evaluate the potential market risks and consumer acceptance of the new product.