Original information for previous question related to this question.

Lady Gaga has joined the 3^rd Times a Charm a company. She is responsible for managing a consumer packaged product with a retail price of $2.00. Retail margins on the product are 33%, while wholesalers take a 12% margin. 3^rd Times a Charm product and the direct competitors for this product sell a total of 40 million units annually, and 3^rd Times a Charm has 24% market share of this total. Variable manufacturing costs for the product are $0.09 per unit. Fixed manufacturing costs to produce this product are $1,800,000. The advertising budget for the product is $1,000,000. Gagas ridiculously low salary and expenses total $70,000. Her salespeople are paid entirely by a 10% commission on revenue. Shipping costs, breakage, insurance, and other miscellaneous costs are $0.04 per unit.

Upon reflection, Gaga decides not to increase her product's advertising budget and keeps it at $1,000,000. Instead, she listens to her neighbor John Legend and decides to give retailers an incentive to promote her product by raising the margin from 33% to 40%. The margin increase would be accomplished by lowering the price of the product to retailers. Wholesaler margins would remain at 12% (a) If retailer margins are raised to 40% next year, how many units of Gaga's product will have to be sold to break even? (b) How many units of Gaga's product will need to be sold next year in order to achieve the same profit that the product achieved this year? (c) What will the product's market share have to be next year for its profit to be the same as this year? (d) What will the product's market share have to be for it to generate a profit of $700,000? $2.00 $0.00 $0.00 7 Manufacturer Selling Price 8 Retail Price to Customer 9 Less: Retailer Margin (33%) 10 Wholesale Price to Retailer 11 Less: Wholesaler Margin (12%) 12 Manufacturer Price to Wholesalers 13 14 Variable Costs (VC) - Per Unit 15 Varible Manufacturing Costs 16 Sales Commissions (10% of Manufacturer Price) 17 Shipping Costs 18 TOTAL VC (per unit) 19 20 Unit Contribution (UC) = Mftr Price - VC (per unit) 21 22 Break Even Point for Gaga's Product 23 24 Fixed Costs (FC) 25 Manufacturing Costs 26 Advertising Costs 27 Product Manager Salary 28 TOTAL FC 29 30 Breakeven (BE) = FC/(UC) 31 32 Market Share to Break Even 33 34 Size of Market (units) 35 36 Market Share % to BE = BE/Size of Market $0.00 #DIV/0! 46,000,000 #DIV/0! 37 46,000,000 0 $0.00! 3B #DIV/0! 38 Profit @ Break Even 39 40 Units Sold (US) 41 Size of Market 42 Company Market Share 43 TOTAL US 44 45 Profit (P) = [(UC x US) - FC) 46 47 48 Units to Achieve $6,070,288 49 Solve for X = [(FC +PG)/UC] 50 51 Market Share for $6,070,288 52 Solve for X =BE/Size 53 54 Break Even to Achieve $1,000,000 55 Breakeven = [(FC +PG)/UC] 56 57 Market Share for $1,000,000 58 Solve for X =BE/Size 59 60 Break Even to Achieve $700,000 61 Breakeven = [(FC +PG)/UC] 62 63 Market Share for $700,000 64 Solve for X = BE/Size 3C #DIV/0! #DIV/0! 3D #DIV/0