Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Innovation products international is a health foods company which recently discovered that increasd soy isoflavones (at least 500 mg every 2 days) in a person's

Innovation products international is a health foods company which recently discovered that increasd 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 $2,250,000. The breakfast bar market size is currently measured at 80 million units of which IPI serves 45%. 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. IPI plans to lunch 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. Innovation Product International's fixed costs is currently $1 million per year with the cost to produce each breakfast bar at 1.25$. The finding of several research studies has determined that consumers would be willing to pay 8.25$ for Soy for Life breakfast at which the retail selling price would be targeted. The retailer margine is 35% and then wholesale margin is 15%.

a. What is the company's selling price of one Soy for Life breakfast bar to its wholesalers? (from my calculations its 4.125$)

b. What is the product's contribution margin as a percentage?

c. What is the product's contribution per unit in dollars?

d. What is the company's breakeven in units?

e. What is the company's breakeven in dollars?

f. What is the company's breakeven sahre of market as a percentage?

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

The Software Audit Guide

Authors: John W. Helgeson

1st Edition

0873897730, 978-0873897730

More Books

Students also viewed these Accounting questions