Study the data of the case below and use it to answer the following questions. For each question give your answer and describe how you calculated it.

Case Data

AquaGro is a hydroponic gardening supplier evaluating the possible launch of a new specialty fertilizer product.

• A case equivalent will sell at a price of $35 and has a variable cost of $20 per case equivalent.
• Market research predicts a sales volume of 12,000 case equivalents at this price.
• The allocation of ongoing fixed costs for manufacturing and warehousing is $60,000
• The initial launch will involve a promotion campaign costing $30,000

Questions

Q1. Calculate the $ contribution per case equivalent.

Q2. Calculate the break-even point in number of case equivalents to cover the ongoing fixed costs.

Q3. Calculate the additional break-even number of case equivalents that must be sold to cover the cost of the promotion campaign.

Q4. Is it worth it? If they sell the predicted number of case equivalents, how much $ profit (or loss) will the firm make, after covering both ongoing fixed costs and the cost of the promotion campaign?

Show your calculations for full credit.