The Miyazaki Balderdash Company has two brands (A & B). Price and cost data for each are presented below.

..................... A/ B Unit price ...... $3.75 /$4.35

Unit variable cost $2.15 /$2.05

Unit volume/year 755,000 units / 1,225,000 units

Annual Promotional expense $625,000 / $675,000

a) Calculate the unit contribution and contribution margin for each brand at the unit level.

b) Given a 15% price cut, estimate the breakeven elasticity of each brand. c) What are the respective brand contributions of A and B to the Miyazaki Company? If Miyazaki Company wishes to retain only one of these brands which one would you recommend for retention? d) It has been proposed that the price of each brand be reduced by 15%. Unit variable costs are unchanged. What would be the new unit contribution and unit contribution margin for each brand assuming no change in unit variable costs?