Question
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
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 %) |
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