Question
Vanessa Pareja has just become a product manager for Brand X as a toy manufacturer. Brand X is a product with a retail price of
Vanessa Pareja has just become a product manager for Brand X as a toy manufacturer. Brand X is a product with a retail price of $1.00. Retail Margins on the product are $0.35 while wholesalers take a 12% margin. Brand X and its direct competitors sell a total of 20 million units annually. Brand X has 24% of this market. Variable manufacturing costs for Brand X are $0.09 per unit. Fixed manufacturing costs are $900,000. The advertising budget for Brand X is $500,000. The brand X product manager's salary and expenses total $35,000. Salespeople are paid entirely by a 10% commission (out of manufacturer price to wholesaler). Shipping costs, breakage, insurance, and so forth are $0.02 per unit.
What is the total fixed cost and unit contribution for Brand X?
What is brand X's break-even point in units?
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