Question 4

SC Johnson distributes their OFF! Clipon product through retailers. They suggest the retailer sell each OFF! Clipon

for $7.99. The retailer purchases the OFF! Clipon from SC Johnson

for $4.99 (wholesale price) and SC Johnsons variable costs are $3.00.

a)What is SC Johnsons contribution margin?

b)What is the retailers contribution margin?

c)Determine the volume hurdle for a retailer if they decrease the retail price by 15%? Show your calculations!

d)Explain the volume hurdle number you have calculated in 4c) above? That is, what does this

number mean?