Mark Sampson Company (MSC) located in Akron, OH. Its December and he is planning for the next calendar year. Mark manufacturers high voltage electrical switches which are found in both commercial and residential buildings. Mark competes with three other firms. Mark estimates that his firm had a market share of 30% last year. He hires an independent sales force (i.e., 3 full time sales reps) who sell Marks products (as well as electrical items produced by other manufacturers). These reps sell Marks switches to 7 regional electrical supply wholesalers. These 7 wholesalers distribute and resell the switches to about 600 electrical supply retail stores located across the continental US. Each wholesaler serves about the same number of retail supply stores. Contractors, electricians and residential consumers shop at these retail supply stores. Last year Marks salesforce was paid strictly on a commission basis, i.e., 5% on each switch they sell or 5% of Marks selling price to the wholesalers). The sales reps sell to wholesalers (wholesalers receive a 10% trade margin). The wholesalers distribute and resell to retail stores (who receive a 20% trade margin). Next year Mark would like retailers to sell his switch for $15.00 - - i.e., the manufacturers suggested retail selling price (MSRSP) for Marks switches next year is $15.00/ unit. Background. Production Costs. Marks expects the cost for materials and parts to average about $5.00 per a batch of ten switches next year. The expected labor cost to make just one switch is about $3.50/switch. Equipment used in the production process is rented on an annual basis (a 12 month contract). Next year the fee for the rented machines should total about $1,000 / month). Marketing and Promotion Costs. Next year Mark plans to promote his products through print ads in trade publications. The promo plan calls for 10 black and white print ads (each $500) and two special feature, color ads (each $2,500). Other marketing efforts such as entertainment and marketing research should be about $18,000 next year. The industry has experienced tough times lately. Over the last 3 years, Marks after tax profit averaged only $80,000.00/yr which was about 60% of the target profit he had hoped to achieve. He hopes next year will be a better year for the industry overall, and an even better year for his firm now that he has a new promotion plan. He believes that the total market size next year will grow by 15% .

1. Next year, what is Marks (the manufacturers) selling price to a wholesaler?

2. Next year, what is the manufacturers unit contribution? _________ ___________________

3. How many units must Mark sell next year in order to achieve a profit of $300,000?