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Luzella is the brand manager for the Nintendo Wii. She sells her product to Best Buy for $199 and Best Buy sells it at a
- Luzella is the brand manager for the Nintendo Wii. She sells her product to Best Buy for $199 and Best Buy sells it at a retail price of $269 to consumers. Sales were going well; in 2008, Luzella sold 3 million units of the Wii. But now, sales were beginning to slow down. To get sales moving again, Luzella wanted to launch a $20 million advertising campaign targeted to senior citizens which would feature the new Wii Fit game. Luzella knew that her product was very profitable, with variable costs of $100, so it seemed like she could afford to spend money advertising the product. She submitted her advertising plan to her boss Tess. Tess liked the idea, but asked Luzella few questions:
- How many incremental units of product she would have to sell to breakeven on the advertising investment, and whether this quantity was feasible, given current sales levels.
- Can Luzella feasibly sell this quantity if she runs her advertising campaign? Why or why not?
- Calculate the number of units company needs to sell in order to earn the target profit of $ 4million.
- Calculate the minimum volume of sales required to maintain the current profit, under the given two scenarios:
- If the selling prices is raised from $199 to $249,
If the fixed cost fall by $5million but the variable costs rise to $125 per unit, calculate the minimum volume of sales required to maintain the curren
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