TWEET Manufacturing Corporation makes bird cages. They have a 4% share of the total market of the one million cages that are sold each year. TWEET markets to the retailers through a network of wholesalers. Retailers keep 25% of the retail selling price of $100 per cage. The wholesalers get 12%. Other information:

Each cage costs $35 to make and package.

The annual operations expense is $600,000/year.

Their 4 sales representatives are each paid a $2,000 per month base salary, plus a 10% commission on the units they personally sell.

Price elasticity research has indicated that unit sales for TWEET would increase by 25% if the prices was reduced to $75 and $40,000 was added to the promotions budget. In order to get the price down, they decided to make the cage out of a lighter weight material. This will save $10. They will also remove the free package of bird seed that was costing $5, add 1 more sales rep and double the commission for all sales reps.

Compute Yearly Profit. Which idea will maximize their profit? ________________

SHOW YOUR WORK IN THE TABLE BELOW that is full information

	SCENARIO #1	SCENARIO #2
Selling Price
Fixed Costs
Variable Costs/Unit
GPCM/Unit
BEP In Units
# of units to be sold
TR
FC
VC
TC
Profit?