Lady Gaga has joined the 3rd Time's a Charm a company. She is responsible for managing a consumer packaged product with a retail price of $2.00. Retail margins on the product are 33%, while wholesalers take a 12% margin. 3rd Time's a Charm product and the direct competitors for this product sell a total of 40 million units annually, and 3rd Time's a Charm has 24% market share of this total. Variable manufacturing costs for the product are $0.09 per unit. Fixed manufacturing costs to produce this product are $1,800,000. The advertising budget for the product is $1,000,000. Gaga's ridiculously low salary and expenses total $70,000. Her salespeople are paid entirely by a 10% commission on revenue. Shipping costs, breakage, insurance, and other miscellaneous costs are $0.04 per unit. (a) What is the unit contribution for this product? (b) What is its breakeven point for this product? (c) What market share does the product need to break even? (d) What is the profit generated by this product? Unit Contribution for Gaga's Product $2.00 Manufacturer Selling Price Retail Price to Customer Less: Retailer Margin (33%) Wholesale Price to Retailer Less: Wholesaler Margin (12%) Manufacturer Price to Wholesalers Variable Costs (VC) - Per Unit Varible Manufacturing Costs Sales Commissions (10% of Manufacturer Price) Shipping costs TOTAL VC (per unit) $0.00 1A Unit Contribution (UC) = Mftr Price - VC (per unit) $0.00 Break Even Point for Gaga's Product Fixed Costs FC Manufacturing Costs Advertising Costs Product Manager Salary 3 TOTAL FC $0.00 Breakeven (BE) = FC/(UC) 1B #DIV/0! 2 Market Share to Break Even 40,000,000 4 Size of Market (units) -5 56 Market Share % to BE =BE/Size of Market 10 #DIV/0! 27 38 Profit @ Break Even 39 40 Units Sold (US) 41 Size of Market 42 Company Market Share 43 TOTAL US 40,000,000 0 44 1D $0.00 45 |Profit (P) = [(UC x US) - FC) 46 47 48 Units to Achieve $6,070,288 49 Solve for X = [(FC +PG)/UC] 50 51 Market Share for $6,070,288 52 Solve for X = BE/Size 53 54 Break Even to Achieve $1,000,000 55 Breakeven = [(FC +PG)/UC] 56 57 Market Share for $1,000,000 58 Solve for X =BE/Size 59 60 Break Even to Achieve $700,000 61 Breakeven = [(FC +PG)/UC) 62 63 Market Share for $700,000 64 Solve for X =BE/Size