Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consumer Products International (IPI) is a health foods company which recently discovered that increased soy isoflavones (at least 500mg every 2 days) in a person's
Consumer Products International (IPI) is a health foods company which recently discovered that increased soy isoflavones (at least 500mg every 2 days) in a person's diet has been able to extend a person's life span by at least 20 years. The company developed a new product called "Soy for Life" which is a tasty breakfast bar that contains 500mg of soy isoflavones in each bar. Cost of research and development for the product was $6,500,000. The breakfast bar market size is currently measured at 140 million units of which CPI serves 50%. Initial taste tests concluded that consumers are unable to make any taste distinctions between a regular breakfast bar and one that contains 500 mg of isoflavones. CPI plans to launch this new breakfast bar initially across the United States using its current distribution channel of supermarket chains and health food stores which have 5,000 locations combined. The company then plans to expand the product market area to include South America, Europe and Asia and also intends to setup manufacturing plants in these expanded market areas. Consumer Product International's fixed cost is currently at $1 million per year with the total cost to produce each breakfast bar at $1.85. The finding of several research studies has determined that consumers would be willing to pay $13.25 for "Soy for Life" breakfast at which the retail selling price would be targeted. The retailer's margin is 40%, the wholesaler's margin is 20%. (Round partial units upward. Round percentages to one decimal point. Round currency to dollars and cents.) (a) What is the company's breakeven in units? (b) What is the company's breakeven in dollars? (c) What is the company's breakeven share of market as a percentage
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