Lee is the product manger for Logitech's new holographic web camera. Logitech has developed it to be the first camera that will project a 3D image of its user into a virtual reality meeting room. The company expects that this technology will replace the boring 2D cameras as remote workers seek a more lifelike connection to their colleagues around the world.

Of course the holographic technology is not cheap. The finance team has estimated that manufacturing costs will be $700 per web camera. In addition, due to the specialized holographic system, Logitech had to hire ten specialists who only work on this camera. The cost for this team is expected to be $25 per camera. Finally, because the system is more sensitive to shocks from shipping, the specialized packaging materials will be $35 per camera.

Lee has been reviewing a competitive intelligence report and there is a startup company in Las Vegas that appears to be working on a similar device. They are funded by several large casinos who are likely to be developing virtual casinos. The latest first year market forecast for the Logitech and the competitor cameras has been raised to 125,000 units.

Lee clicks to an email from the finance team. In it, they have informed her that the cost for the holographic camera manufacturing plant just went up to $15,000,000. It is probably due to increased labor costs because she knows from the Human Resources department that her marketing team's salaries went up and the cost for her total team is now $750,000. Finally, she is getting pressure from her management to lower her marketing budget of $8,000,000, but she is hesitant to do so given the new competitor information.

*note all info is the same for all questions*

A) If Lee decides to set the price in a way that Logitech will receive $975 of revenue per camera, how many units will Logitech need to sell to make $1,000,000 in profit at the end of year 1?

B) What would the expected unit contribution be if Lee decided to set the price per camera in a way that resulted in $1000 of revenue per camera for Logitech and she decided to hire a commissioned based sales team that cost $10 per camera?

C) If the revenue per camera to Logitech is $1000 and is the same as the price to the end consumer what can likely be concluded from Logitech's solution

-Logitech finance team is calculating a negative fixed cost allocation for the camera

-they are only selling it direct and are not using any channel partners

-their channel partners are expecting a 20% profit margin for every camera sold

-Logitech's marketing teams paid by commission and should be calculated as a variable cost