Question
One of the first decisions you have to make as the brand manager for Vesuvius is whether or not to add a new line of
One of the first decisions you have to make as the brand manager for Vesuvius is whether or not to add a new line of counter top vegetable steamers, the "Super-Vesuvius line. The line would be marketed in addition to the original Vesuvius line. Your brand assistant has provided you with the following facts.
a. Retail selling price$70 per unit
b. All margins the same as before
c. Direct factory labor$3 per unit
d. Raw materials$6 per unit
e. Additional factory and admin. overheads$3.5 per unit (if unit volume = 50,000)
f. Salesperson's commissions: .the same percent as before
g. Incremental sales force travel cost$60,000
h. Advertising for Super Vesuvius$650,000
i. New equipment needed$950,000 (to be depreciated over 10 years)
j. Research and development spent$250,000 up to now
k. Research and development to be$600,000 (to be amortized over 5 years) spent this year to commercialize the product
Questions
1. What is the contribution per unit of the Super-Vesuviusbrand?
2. What is the break-even volume in units and in dollars?
3. What is the sales volume in units necessary for Super Vesuvius to yield in the first year, a 24 percent return on the equipment to be invested in the project?
(III) The $70 selling price for Super Vesuvius seems high to you. You thought you might lower the price to $60 per unit and raise retail margin to 25 percent.
Question
What is the break-even volume in units?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started