INFORMATION GIVEN:

Production and Cost Information: Initial investment to expand the production facility with equipment is estimated at $1,300,000, and Bauer requires $145,000 for general overhead expenses. Peter estimates that the company will need to spend $400,000 on advertising to promote the ProGlideRin the first year, which will be used for billboards, radio, and print advertising. Peter expects 15% of the retail price to go for labor costs, 25% of the retail price for raw material and packaging expenses, and 5% of the retail price for transportation expenses. Finally, Bauer decides to first start selling the ProGlideR through a distributor rather than directly to retailers. The distributor expects contribution margins of 20% while retailers look for 25% contribution margins on figure skates.

QUESTION: [6 points]Complete the following calculations for each step of the distribution channel for theProGlideRbefore the price discount.

Retail Selling price

Retail Variable cost

Retail Markup (in $)

Retail Markup(in %)

Distributor Selling Price

Distributor Variable cost

Distributor Margin (in $)

Distributor Margin (in %)

Manuf. Selling Price

Manuf. Variable cost

Manuf. Margin (in $)

Manuf. Margin (in %)