Norfitel Corp. is offering a new economy model of its smartphone for $250 at retail price. Within their marketing channel, wholesalers run the bulk logistics downstream while retailers conduct the point of sales & merchandising functions. Retailers command a 30% margin; the Wholesalers charge 20% margin. Norfitel has a fixed cost budget which includes the following: $5 Million for sales & distribution operations to wholesalers, $12 Million for advertising & promotions via television/internet/social -media venues, $3 Million for general & administrative expenditures toward managing this product line. Per Unit, their variable cost structure comprises of the following: $40 for purchase/procurement of the electronic components/circuitries/sub-assemblies, $60 for direct labor & production, $10 for quality inspection, $15 for finishing/packaging/labeling. It forecasts selling 1 Million units in the first year. The development team has also been granted an appropriation of $3.25 Million toward strategic purposes of market research, technical design, product engineering, & telecommunication systems integration configurations applied for this model and their future competitive/innovative offerings.

(a). ~ What will be Norfitels Unit Selling Price for this model?

(b). ~ What is the breakeven volume for this model in units and in dollars? ~ Ex plain in business marketing language what this break-even volume means. ~ What metric would you compare this break-even volume with to check if its feasible?

(c). ~ If Norfitel targets a profit of $5 Million in this line, what should be its sales figures in units?

(d). Now, the financial allocator is requiring this model to also achieve a 10% ROI (return on investment) to justify its fair utilization of the $3.25 Million strategic advancement budget. ~ Thus, what does the relevant fixed costs NOW become? ~ Compute the necessary sales volume required to achieve this 10% ROI. ~ To this effect, are you using the method of expensing or capitalizing for recovery of these relevant fixed costs