Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Drone Innovations, Inc. (DII) is a local drone manufacturer that is planning to launch a new drone that uses solar technology which will allow the

image text in transcribed
Drone Innovations, Inc. (DII) is a local drone manufacturer that is planning to launch a new drone that uses solar technology which will allow the drone to fly 100 times farther and 100 times longer than any existing drone on the market. Cost of research and development is $350,000 and the drone market size is currently measured at 4,500,000 of which DIl currently serves 40%. Newspaper advertising will carry a coupon that will entitle the consumer to receive $20.00 off the price of each drone purchased. Research has shown that 50% of customers will redeem the coupon. (Hint: coupon redemption is a variable cost). The cost of the newspaper advertising (excluding coupon returns) will be $600,000. Other fixed costs will be $2 million per year. The cost to produce each drone at $25. The finding of several research studies has determined that consumers would be willing to pay $90 for each drone at which the retail selling price would be targeted. The retailer's margin is 30% and the wholesaler's margin is 20%. (Please type clearly - 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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Markets and Institutions

Authors: Anthony Saunders, Marcia Cornett

6th edition

9780077641849, 77861663, 77641841, 978-0077861667

More Books

Students also viewed these Finance questions

Question

explain how interest rates are determined

Answered: 1 week ago