Total industry demand for this type of consumer packaged product is expected to increase to 46 million units next year. Bradley Cooper has convinced Gaga to raise the advertising budget for this product to $1,500,000. (a) If the advertising budget is raised next year, how many units of Gaga's product will need| to sold to break even? (b) How many units of Gaga's product will need to be sold next year in order to achieve the same profit that the product achieved this year? (c) What will the product's market share have to be next year for its profit to be the same as this year? (d) What will the product's market share have to be for it to generate a profit of $1 million? $2.00 $0.00 $0.00 7 Manufacturer Selling Price 8 Retail Price to Customer 9 Less: Retailer Margin (33%) 10 Wholesale Price to Retailer 11 Less: Wholesaler Margin (12%) 12 Manufacturer Price to Wholesalers 13 14 Variable Costs (VC) - Per Unit 15 Varible Manufacturing Costs 16 Sales Commissions (10% of Manufacturer Price) 17 Shipping Costs 18 TOTAL VC (per unit) 19 20 Unit Contribution (UC) = Mftr Price - VC (per unit) 21 22 Break Even Point for Gaga's Product 23 24 Fixed Costs (FC) 25 Manufacturing Costs 26 Advertising Costs 27 Product Manager Salary 28 TOTAL FC 29 30 Breakeven (BE) = FC/(UC) 31 32 Market Share to Break Even 33 34 Size of Market (units) 35 36 Market Share % to BE = BE/Size of Market $0.00 2A #DIV/0! 46,000,000 #DIV/0! 38 Profit @ Break Even 39 40 Units Sold (US) 41 Size of Market 42 Company Market Share 43 TOTAL US 46,000,000 0 44 $0.00 2B #DIV/0! 45 Profit (P) = [(UC x US) - FC) 46 47 48 Units to Achieve $6,070,288 49 Solve for X = [(FC +PG)/UC] 50 51 Market Share for $6,070,288 52 Solve for X = BE/Size 53 54 Break Even to Achieve $1,000,000 55 Breakeven = [(FC +PG)/UC] 56 57 Market Share for $1,000,000 58 Solve for X = BE/Size 2C #DIV/0! #DIV/0! 2D #DIV/0! 59