# OHs_P3_Answers%20to%20Math%20Problem%203 - MAR 4803 Prof....

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MAR 4803 Prof. Alan Sawyer Assignment #3 Solution to Economic Analysis Problems 1. Margin Structure Retail Price \$1.00 - Retail Margin \$ 0.33 (33% of \$1.00) = Wholesale Price \$ 0.67 (price to retailer) - Wholesale Margin \$ 0.08 (12% of \$0.67) = Manufacturer’s Price \$ 0.59 (price to wholesaler) Variable Costs Manufacturing \$ 0.090 + Shipping, etc. \$ 0.020 + Commissions \$ 0.059 (10% of manufacturer's selling price) = Unit Variable Cost \$ 0.169 Manufacturers Price \$ 0.590 - Unit Variable Cost \$ 0.169 = Unit Contribution \$ 0.421

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2. Breakeven Breakeven = Total Fixed Costs Unit Contribution Manufacturing \$ 900,000 + Advertising \$ 500,000 + Product Management \$ 35,000 = Total Fixed Cost \$1,435,000 Breakeven = \$1,435 k = 3,408,551 units per year .421 3. Breakeven Market Share Market Share = Volume Total Units In Market Breakeven Market Share = 3,408,551 = 17% 20 million
4. Profit Impact if Keep current 24% Market Share Profit Impact = (Unit Volume) x (Unit Contribution) – (Fixed Costs) Volume

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