QUESTION 1 A marketing channel manager of HD company wants to make a sales and promotion plan for next year. In order to evaluate the effectiveness of the plan, the manager identifies all the costs and other relevant information and conducts break-even analysis. Here are the identified costs and other related information. HD company invested 14 million in refurbishing a factory Estimated total fixed costs per year: 22 million Estimated variable cost per unit: $138 Expected sales per year: 1 million Retailers: 30% markup on selling price Whole sellers: 20% markup on selling price Q1. What is the unit cost? Q2. If HD company desires a 25% markup on sales, what price should be set? Q3. If HD company wants a 40% return on the investment. What will be the price? Q4. If HD company wants to set $320 as MSRP (manufacturer's suggested retail price) of a product. Identify the following margins and prices Retailer's margin: Wholesaler's price: Wholesaler's margin: HD's price: Q5. The main competitor of HD company reduced its MSRP to $260. HD company considers reducing MSRP to $260. What will be HD's price for wholesalers? Q6. Do you think $260 is a good pricing strategy? Why/Why Not? Now the manager conducted break-even analysis. Use the answer of Q2 for price (Q7 - Q11). Q7. How many product units must be sold to break even? Q8. What is the dollar sales at the break-even point? Q9. HD company wants to have total profit of $ 3 million. How many product units must be sold to achieve this goal? 09. HD company wants to have total profit of $ 3 million. How many product units must be sold to achieve this goal? Now HD company considers two marketing promotion options (without considering profit goals). Promotion Option 1: Advertising on a local cable channel. The advertising cost is $1 million. Promotion Option 2: Sales promotion next month (10% price discount on selling price). Q10. How many product units must be sold to cover the Total Cost (including the advertising cost) when the promotion option 1 is chosen? Q11. How many product units must be sold to cover the Total Cost (including sales promotion cost) when the promotion option2 is chosen? +++++++++++++++++++++++++++++++++++++++++++++++++ Write answers ONLY. Price: Round to the Nearest Hundredth Sales Unit/Volume: must be whole numbers Q1: Q2: Q3: Q4 Retailer's margin: Wholesaler's price: Wholesaler's margin: HD's price: Q5: Q6: Q7: 08: 09: Q10: Q11