John Q. Analyst thinks that Oscar Mayer's brand name will allow them to sell at least 200,000 units per week. If Oscar Mayer in fact sells this number of units per week, what will be their year one profit?

OSCAR MAYER John Q. Analyst, is employed by Oscar Mayer in their hot dog division. His boss, Jennifer Knowsalot, assigned him the task of producing the nancial analysis for launching or not launching the Oscar Mayer Chicken Hot Dog. John Analyst knows many facts, but is not very good at analysis. He is meeting with his boss to present his numbers in just 3 hours, and he still has not begun his analysis. He has turned to you to help him save his job. John talked to all of the different divisions at Oscar Mayer and came up with the following information. The R&D people say that they have invested $75,000 over the last year coming up with a recipe for a chicken hotdog that tastes good. In addition, R&D and production together spent $55,000 experimenting with and modifying some of their equipment to process chickens, and now have a machine that can be moved into full-scale production. In order to move into full-scale production, an additional $2,250,000 in new equipment must be purchased, which would add $3 75,000 in annual maintenance and $412,000 per year in salaried employees to support it. The average piece of Oscar Mayer equipment lasts for ten years, after which it has zero value and must be scrapped. This past year, the total market for hotdogs was 120 million pounds. Oscar Mayer sells their Regular Hotdo gs (beef and pork) to wholesalers for $1.16 per pound. Variable costs for Regular Hotdogs total $0.71 per pound. The production manager estimated the following costs to produce a pound of new chicken dogs: 40 cents per pound for deboned chicken meat, 21 cents for processing, 8 cents for freight and packaging, pd 4ecents for labor. Oscar Mayer's distributors use a 26% markup_ to priceljre product. All retailers se e chicken-dog for a retail price of $1.40 per pound, and retailers have m_argin_s of 10%. John believes that the company will use the chicken dog to ght off new entrants, and will therefore set an advertising budget of $1.5 million spread evenly over three years. John is very nervous about his rst meeting with his new boss, who is a Johnson graduate, and is known throughout the company for her skill with numerical analysis. He has the following questions