Question
Direction: Carefully observe the following information, and provide your attempts--computation processes and answers--to each problem separately. Ignore all prior figures: Read the Following Problem Descriptions
Direction: Carefully observe the following information, and provide your attempts--computation processes and answers--to each problem separately.
Ignore all prior figures: Read the Following Problem Descriptions for Q3.1 Q3.5:
Pomona Equipment Company is estimating Market Sales Potential (Units & Dollars) in 2023 related to special tools, and conducting Sales Forecast (Units & Dollars) in 2023 for its newly developed special tool. The average unit of this special tool in the market is expected to sell at $5. There are three groups of buyers that Pomona Equipment Company is paying attention to:
- Group 1: Southern California Male population aged between 18~24 years; 30% of this population group is expected to purchase this special tool; Average consumption per person per year is 3 units.
- Group 2: Southern California Male population aged between 25~44 years; 20% of this population group is expected to purchase this special tool; Average consumption per person per year is 2 units.
- Group 3: Southern California Female population aged between 18~24 years; 10% of this population group is expected to purchase this special tool; Average consumption per person per year is 1 unit.
- Pomona Equipment Companys Info: Its own target market: 40% of the potential buyers described above; Communication/Distribution coverage: 50% of the potential buyers described above; Special tool price: $5/unit.
Tips for Solutions: Use the most recent information of the provided Census table, and take gender ratio and population growth rates into your computations.
Tips for Solutions: Do Simple linear trend prediction to estimate the future population for each group.
Southern California Census: Population by Sex and Selected Age Groups: 2000 and 2010
Note: No Census data available for year 2020. Most recent data reported year is 2010.
Sex and Selected Age groups | 2000 | 2010 | Change, 2000 to 2010 | |||
Number | Percent | Number | Percent | Number | Percent | |
Total Population | 2,500,000 | 100.00% | 3,000,000 | 100.00% | 500,000 | 20% |
Sex | ||||||
Men | 1,250,000 | 50.00% | 1,500,000 | 50.00% | 250,000 | 20.00% |
Women | 1,250,000 | 50.00% | 1,500,000 | 50.00% | 250,000 | 20.00% |
Selected Age Groups | ||||||
Under 5 years | 100,000 | 4% | 110,000 | 4% | 10,000 | 10% |
5 to 17 years | 500,000 | 20% | 550,000 | 17% | 50,000 | 10% |
18 to 24 years | 300,000 | 12% | 360,000 | 12% | 60,000 | 20% |
25 to 44 years | 800,000 | 32% | 960,000 | 32% | 160,000 | 20% |
45 to 64 years | 400,000 | 16% | 500,000 | 17% | 100,000 | 25% |
65 years and over | 400,000 | 16% | 520,000 | 17% | 120,000 | 30% |
3.1) Estimate Market Sales Potential (Units and Dollars) related to this special tool in 2023. (6pts)
3.2) Estimate Pomona Equipment Companys sales forecast (Units and Dollars) in 2023 related to its special tool. (4pts)
3.3) For Pomona Equipment Company, the total variable cost (= cost of goods sold) of its special tool is $2 per unit (It will stay unchanged). Compute the unit contribution ($/unit) and contribution margin ratio (%) of this tool (4pts)
3.4) Estimate the total contribution ($, total gross margin) for Pomona Equipment Company related to this tool. (4pts)
3.5) Pomona Equipment Company will spend $60,000 for all marketing expenses, and $40,000 for administrative costs. The total R&D cost related to this tool is $200,000. Would you launch this tool in 2023? Why? (4pts)
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