Suppose you run a business that sells computer software to large medical offices that helps them with

their patient records and billing. Your marketing department has completed a market research project (Chapter 5) and has provided you the following information:

What are your total fixed costs for the year?

What is the unit variable cost for each software package?

What is your unit contribution?

What is your mark-up?

What would be your contribution margin?

How many software packages would you have to sell in the year to break even?

How much profit or loss are you making if you have 15% market share?

If you added a 4th salesperson (same expenses as the others) and you forecast she would sell an additional 35 units, should you hire her?

PRICE CALCULATIONS HOMEWORK EXERCISE - Suppose you run a business that sells computer software to large medical offices that helps them with their patient records and billing. Your marketing department has completed a market research project (Chapter 5) and has provided you the following information: - The total market for software of this type is 2,000 units per year. - The average price per unit for the software package is $5000. - The average costs associated with software production include: - \$1,000 per unit licensing fee - \$250 per unit production/packaging/misc. costs - $20,000 per month bulldingiwarehouse lease - $10,000 per month promotional materials - In addition, you currently have 3 salespeople who work for you selling and installing the software packages. The associated selling expenses are as follows: - $3,000 per month salary for each salesperson - \$2,500 per month expense budgets for each salesperson (travel, entertainment, etc) - $1,000 per unit triaing and installation sorvice expenses - 5% commission rate based on sales PRICE CALCULATIONS HOMEWORK EXERCISE - What are your total fixed costs for the year? - What is the unit variable cost for each software package? - What is your unit contribution? - What is your mark-up? - What would be your contribution margin? - How many software packages would you have to sell in the ypar to break even? - How much profit or loss are you making if you have 15% market share? - If you added a 4th salesperson (same expenses as the others) and you forecast she would sell an additional 35 units, should you hire her