Harold Grabner is the new president of Oneonta Glass Arts Incorporated (OGAI) a small manufacturing firm in Oneonta, NY, which produces exquisite glassware, using a European process developed by his ancestors many generations ago in the Innsbruck area of Austria. His great grandfather, an immigrant from Europe in the 1870s, established a small kiln near Oneonta soon after arrival. After he passed away, Harolds grandfather and then his father continued to operate it. Harold had worked at the plant as a young man, but subsequently moved to New York City where he operated a glass artists co-operative wholesale and retail firm. He returned to Oneonta in December 2016 when his father developed serious health issues. Just like dad, Harold too was not very familiar with the marketing of glassware, which is probably why OGAI used brokers to sell to wholesalers who marketed to retailers. Harold occasionally thought about eventually developing his own sales force, but that was still some time away. Harold is currently taking a second look at his plan to improve his firms profit performance. In 2017 OGAI had a modest profit of $160,000; his 2018 goal is to increase this by 25%.

The 2017 retail selling prices of the three variations OGAI sold were $800, $600, and $400 per set, accounting for 25%, 40%, and 35%, respectively, of retail sales.a In 2017, OGAI paid its brokers a 9% commission on all dinnerware sold to wholesalers. Wholesalers margin was 28% on retailer purchase price while retailers markup was 39% on wholesaler selling price. OGAIs 207 material and labor costs per glassware set ran about $95.00, while packaging and crating costs were $8.35 per set.

Harold estimates machinery maintenance expenditures to be about $90,000 per year. OGAI uses both push and pull promotional approaches to marketing through their channels of distribution. OGAI sets aside a $11 co-operative advertising allowance for every set sold in the channel. In 2017, OGAI attended four national trade shows at $9,000 each and three regional trade shows at about $4,000 each. OGAI spent nearly $240,000 advertising in national consumer magazines and an additional $30,000 in trade publications to wholesalers and retailers. All of these will repeat for 2018.

Broker commission for 2018 will increase to 12% while packaging crating costs will go up to $9.50 per set. Harold also plans to increase 2018 manufacturer selling price by about $75 per set.

Assuming no changes in costs and prices other than those mentioned earlier, how will Harolds required level of sales (RLS) to reach the 2018 profit goal, in units and dollars, differ from those for the 2017 profit goal, in units and dollars? That is, will they go up, down or stay the same?

Q01. What was the weighted average retail selling price of a typical OGAI pattern SET in 2017? Based on this, what was the 2017 retailers cost, the wholesaler selling price, the wholesalers cost and therefore OGAIs manufacturer selling price of a typical set?

Q02. Starting with the weighted retail selling price, calculate OGAIs 2017 manufacturer selling price of a typical set in a single step, using the markup chain concept.

Q03. Line itemize, then total these to determine OGAIs 2017 unit variable cost of a typical set.

Q04. What was OGAIs 2017 $Contribution and %Contribution for a typical set?

Q05. What was OGAIs (do not itemize) Total Fixed Cost in 2017? Hence, what was their Breakeven Point in number sets and dollar sales? (caution: always calculate $ as rounded-up # * USP)

Q06. What was OGAI's TFC + Profit in 2017? Hence, what was their 2017 Required Level of Sales or RLS in number of sets and dollar sales? (caution: always calculate $ as rounded-up # * USP)

Q07. What is the proposed OGAI manufacturer selling price per set and $ profit goal for 2018?

Q08. Line itemize, then total these to estimate OGAI's 2018 unit variable cost per set.

Q09. Estimate OGAI's 2018 $Contribution and %Contribution for a typical set?

Q10. Estimate OGAIs (do not itemize) Total Fixed Cost in 2018? Therefore what was their Breakeven Point in number of sets and dollar sales?

Q11. Estimate OGAIs TFC + Profit goal for 2018? Therefore what is their 2018 Required Level of Sales or RLS, i.e. BEP with profit included, in number of sets and dollar sales?

Q12. Therefore, estimate the difference (2018 minus 2017) in OGAIs RLS in Number of Sets and Dollar Sales to reach the profit goal for 2018 vs 2017?