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You have just been promoted to product manager for the Allgood (AG) brand multi-symptom 12-hour analgesic product. The AG product is currently selling at a
You have just been promoted to product manager for the Allgood (AG) brand multi-symptom 12-hour analgesic product. The AG product is currently selling at a retail price of $8.99. Retail margins on the product are 33%, while wholesalers take a 12% marg Allgood and its direct competitors sell a total of 200 million units annually: Allgood has 25% of this market. Variable manufacturing costs for Allgood are $2.92 per unit. Fixed manufacturing costs are $950,000. The advertising budget for Allgood is $5,500,000. The Allgood product manager's salary and expenses total $70,000. Salespeople are paid entirely by a 12% commission. Shipping costs, breakage, insurance, and so forth are $0.15 per unit. 1. What is the unit contribution for Allgood? 2. What is Allgood's unit break-even point? 3. What market share does Allgood need to break even? 4. What is Allgood's dollar breakeven? 5. What is Allgood's operating or contribution profit? Industry demand is expected to increase to 250 million units next year. The Owner is considering raising his advertising budget to $10 million. 6. If the advertising budget is raised, how many units will Allgood have to sell to break even? 7. How many units will Allgood have to sell in order for it to achieve the same profit level that it did this year? 8. What will Allgood's market share have to be next year for its profit to be the same as this year
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