Question
Dr. Berry's Moonshine Elixir (DMM) sells 12 oz bottles of healthy fruit based drinks. Marketing is important for DBE. Their point of differentiation is that
Dr. Berry's Moonshine Elixir (DMM) sells 12 oz bottles of healthy fruit based drinks. Marketing is important for DBE. Their point of differentiation is that their secret recipes use only a blend of organic fruits in volcanic soil. DMM is annual marketing budget is allocated as follows: Social media $500,000 Trade shows $200,000 Event marketing $100,000 TV and radio $500,000 Print $200,000 Social Media and Sport Celebrity Endorsements $500,000 The salary and expenses total are $4,000,000. Insurance is $40,000. Office space, equipment and supplies are $100,000. Fixed manufacturing costs (mixing and filling machines, etc) are $ 500,000. Cost for running an Organic Fruit Farm on a volcanic island is $2,000,000. Salespeople are paid by a 10% commission of the manufacturers selling price Shipping costs is $0.15 per unit. Additional cost to produce a 12 oz bottle are as follows: Ingredients = $0.75 Bottles =$0.15 Caps = $0.05 Labels = $0.10 Fruit flavoring = $0.15 The drinks have a retail price of $7.00. Retail margins on the product are 40%, while wholesalers take a 20% margin. DBE and its direct competitors (The Healthy Cow, Fruit World, Positive Passion, etc.) sell a total of 50,000,000 units annually and DMM has 10% of this market. 1. What is the break-even point? 2. What market share does Bison need to break even? 3. What is the unit contribution? 4. What is Bisons annual profit?
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