Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Company XYZ manufactures a product #101 that has a retail price of $2,500. Retailers receive a 25% margin and wholesalers receive a margin of 20%.
Company XYZ manufactures a product #101 that has a retail price of $2,500. Retailers receive a 25% margin and wholesalers receive a margin of 20%. Shipping and package costs $50 per unit. Fixed manufacturing costs are $1,250,000. The variable production costs are estimated to be $800 per unit and include direct labor costs and raw materials. The marketing promotion expense equals to 10% of sales. Executive salaries are $250,000 and the company employs two sales representatives at a salary of $50,000 per year. The annual advertising budget is $1,000,000. The company has a 5% market share of a total market of 250,000. What is the break-even for product #101 in units? What is the market share to achieve break-even volume? What are Company XYZ's Net Marketing Contribution, MROI and current profits? The company's owners have invested $5,000,000 and expect a yearly return of 20%. Has the product achieved this goal? The CMO provides research that an investment of $250,000 in advertising will increase sales by 7%? On the other hand, the CFO has proposed that fixed costs are too high and that advertising should be cut by 150,000. As CEO, how would you respond to these two proposals
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started