(I) You have just been appointed the product manager of the "Vesuvius" counter top vegetable steamers in a large consumer products company. As part of your new job, you want to develop an understanding of the financial situation for your product. Your brand assistant has provided you with the following facts:

a. Retail selling price $50 per unit

b. Retailer's margin 20%

c. Jobber's margin 15%

d. Wholesaler's margin 23.5%

e. Direct factory labor $2 per unit

f. Raw materials $1 per unit

g. All factory and administrative overheads $2 per unit (if unit volume = 100,000)

h. Salesperson's commissions 10% of manufacturer's selling price

i. Sales force travel costs $215,000

j. Advertising $900,000

k. Total market for counter top vegetable steamers 1 million units

l. Current yearly sales of "Vesuvius" 190,000 units

Questions

1. What is the contribution per unit for the "Vesuvius" brand?

2. What is the break-even-volume in units and in dollars?

3. What market share does the Vesuvius brand need to break even?

4. What is the current total contribution?

5. What is the current before-tax profit of the Vesuvius brand?

6. What market share must Vesuvius obtain to contribute a before tax profit of exactly $3.9 million?