Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Innovation Products International (IPI) is a health foods company which recently discovered that increased soy isoflavones (at least 500 mg every 2 days) in a

image text in transcribed
Innovation Products International (IPI) is a health foods company which recently discovered that increased soy isoflavones (at least 500 mg every 2 days) in a person's diet has been able to extend a person's life span by at least 20 years. The company developed a new product called "Soy for Life" which is a tasty breakfast bar that contains 500 mg of soy isoflavones in each bar. Cost of research and development for the product was $7,500,000. The breakfast bar market size is currently measured at 100 million units of which IPI serves 35%. Initial taste tests concluded that consumers are unable to make any taste distinctions between a regular breakfast bar and one that contains 500 mg of isoflavones. IPl plans to launch this new breakfast bar initially across the United States using its current distribution channel of supermarket chains and health food stores which have 5,000 locations combined. The company then plans to expand the product market area to include South America, Europe and Asia and also intends to setup manufacturing plants in these expanded market areas. Innovation Product International's fixed cost is currently at $1 million per year with the total cost to produce each breakfast bar at $2.25. The finding of several research studies has determined that consumers would be willing to pay $11.25 for "Soy for Life" breakfast at which the retail selling price would be targeted. The retailer's margin is 35%, the wholesaler's margin is 20%. (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? (Please type all calculation details). (b) What is the company's breakeven in dollars? (Please type all calculation details). (c) What is the company's breakeven share of market as a percentage? (Please type all calculation details)

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

Handbook Of High Frequency Trading

Authors: Greg N. Gregoriou

1st Edition

0128022051, 978-0128022054

More Books

Students also viewed these Finance questions