• PepsiCo is considering expanding its snack food line with a new product and has provided the following financial details:
  • Development Costs: $300 million
  • Marketing Expenses: $150 million
  • Estimated Annual Sales: $1.5 billion
  • Variable Costs: $800 million annually
  • Fixed Costs: $250 million annually

• Requirements:
  1. Calculate the break-even point in sales dollars for the new snack food product.
  2. Prepare an income statement for the first year of sales.
  3. Analyze the contribution margin ratio for the new snack food product.
  4. Discuss the strategic benefits of the new product for PepsiCo’s portfolio.
  5. Evaluate the potential market risks and consumer acceptance of the new product.