The Jonco Company is considering adding a new product to their line of kitchen gadgets. Jon has budgeted $70,000 for a marketing campaign. Jon anticipates a distribution cost of $5.00 on each unit. Jonco can obtain quantity discounts on the cost of the Dice-O-Matic as follows

Qty < 1500 1500-1999 2000-2499 2500-2999 3000-3499 > 3499 Cost $82.50 $81.00 $78.00 $75.75 $72.50 $70.00 If he adds the product to his line, Jon projects an increase in his payroll expense of $42,000 and an increase in overhead of $18,000. Joncos previous experience with similar products and promotion programs is reflected by the following price/ demand data. Price 109.95 119.95 129.95 139.95 149.95 159.95 169.95 Demand 3250 3100 3000 2800 2650 2500 2000

b) How do sales revenue and total costs vary as the selling price ranges from $110 to $160, in increments of $5? Show the results in a single table and a single chart. c) How does operating income change as a result of simultaneous changes in Price ($110-$160) and Distribution Cost ($3-$10)?

d) What is the least Jonco could charge for the Dice-O-Matic and still break even?

e) What selling price is required to generate a 45% contribution margin ratio?