The questions are letter A & B. Please help!
In 7001 . Nunterilo Canada was tranchang ita nev Canse Boy Color hand held gamunt system with the following jricing and cost structure for hardware arid sothere (castridprs). The maenacturer's aiggested iotal price (MsikP) ce the hudwaee unit viruld be 5100 with a retail trade magin of ges of the fetail selling price mod a wholesale trade masgin of 5% of the wholecale seling price. Margits ware thep on the had dwase becrube sodtwace was where the money was nade. Software cantrulges weald tell at retal for 543 with a retail marpin of 20 the and a wholesse mavein of 407 . During the launch yes, Nmitendo plarned to sell only discot to layp setul accounts and therefose Nivitedo woold be rocenime the wholesale price for both handwae and woftware. They forecast sales of 200.000 hardware unats and 600.000 soffware cartadges in the fint year. The iotal Canadun market for hand held gamung oystems nerilyear was estimated to to 300,000 hardwaye units (op frem 250,000 laat yew) and 800,000 eatrid tos fup frem T00,000 laat year). That (point of aale malerals). Ten percet of Nintends Canada 512 millon fired orehesh would be allocated 6 the ciane Hoy driuace and that woud include allowances for managnent salaries. with the retal grice and work backwads by calculating the retal trade margin firit and then calmuling the wholriale prieos b. What is Xintendo's contribaion margin in detlars per unat pes urih varable cost for hardware and for sodware? Hant arat with che wholeale prices calculated an pat (a) acd tae that to calcufate the In 2001, Nintendo Canada was launching its new Game Boy Color hand-held gaming system with the following pricing and cost structure for hardware and software (cartridges). The manufacturer's suggested retail price (MSRP) on the hardware units would be $100 with a retail trade margin of 8% of the retail selling price and a wholesale trade margin of 5% of the wholesale selling price. Margins were tight on the hardware because software was where the money was made. Software cartridges would sell at retail for $43 with a retail margin of 20% and a wholesale margin of 40%. During the launch year, Nintendo planned to sell only direct to large retail accounts and therefore Nintendo would be receiving the wholesale price for both hardware and software. They forecast sales of 200,000 hardware units and 600,000 software cartridges in the first year. The total Canadian market for hand-held gaming systems next year was estimated to be 300,000 hardware units (up from 250,000 last year) and 800,000 cartridges (up from 700,000 last year). That compares with a market growth rate of just 5% for console systems. Their largest competitor, Sega Game Gear, had 15% of the market for hand-held gaming hardware and 15% of the software market as well. Nintendo's marketing budget for the launch year included \$3 million for advertising. $1.3 million for consumer sales promotion (sampling, contests, and cross promotions), and $400,000 for trade promotion (point of sale materials). Ten percent of Nintendo Canada's $12 million fixed overhead would be allocated to the Game Boy division and that would include allowances for management salaries. a. At what wholesale prices will Nintendo be selling the hardware and software to retailers? Hint: start with the retail prices and work backwards by calculating the retail trade margin first and then calculating the wholesale prices. b. What is Nintendo's contribution margin in dollars per unit and unit variable cost for hardware and for software? Hint: start with the wholesale prices calculated in part (a) and use that to calculate the
