Question 1.

Solve for the following

Unit Selling Price

Unit Variable Cost

Given that the annual depreciation cost for the local plant is $50 million, use the data in the table below to allocate the xed cost of the plant based on unit sales. Then calculate total xed cost and break-even units. Amounts (except depreciation) are in local currency; Market 1 Market 2 Market 3 Projected Units (M) 120 220 40 Avg. Selling Price 75 5.00 24 Avg. Variable Cost 44 2.60 18 Advertising (M) 250 100 30 Promotion (M) 70 20 15 Sales Force (M) 90 45 25 Administration (M) 250 22 100 Fixed Costs (M) 175 10 30 Exchange Rate per $ 39.6425 2.4987 15.3204 Allocated Plant (M) Total Fixed Cost (M) Brea k-Even Units (M) Breakeven analysis attempts to determine the volume of sales necessary for a manufacturer to cover costs or to make revenue equal costs. It is helpful in setting prices, estimating prot or loss potentials, and determining the discretionary costs that should be incurred. The general way to calculate breakeven units is to take the ratio of total xed costs to the difference between unit selling price and unit variable cost, or, as a formula, Break-Even Units 2 Total Fixed Costs / ( Unit Selling Price Unit Variable Cost) In CountryManager, total xed costs can be broken into discreonary marketing expenditures (such as sales force and advertising budget) and xed costs for plant and overhead. The selling price is the MSRP less the volume discount. Unit cost of goods sold, allowance expense, shipping, and tariffs make up the variable cost. This assignment will give you practice calculating breakeven units and practice using breakeven analysis to check your pricing decisions and sales forecasts. 1. Given the data in the following table, calculate the selling price and variable cost for each SKU. MS RP 100 120 150 Allowance 10% 5% 20% Channel Discount 22% 30% 26% Unit Cost 25 29 34 Shipping 8: Tariffs 3 4 5 Unit Selling Price Unit Variable Cost