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Marketing Problem

# Marketing Problem - = 82031 units Now we have to find BE\$...

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Marketing Problem (Case # 2) a. Contribution per CD units =? Contribution per unit = selling price per unit – variable cost per unit But it is given that the selling price is per unit = \$9 1.25 + 0.35 + 1 = 2.6 The contribution per unit = 9 – 2.6 = \$ 6.40 per unit b) Breakeven volume =? BE volume = total fixed cost / selling price per unit – variable cost per unit BE volume = total fixed cost / contribution margin TFC = studio recording inc. overhead + advertising and promotion 250000 + 275000 = \$525000 Contribution margin = \$6.4 per unit Therefore BE volume = 525000 / 6.4

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Unformatted text preview: = 82031 units Now we have to find BE\$: BE\$ = total fixed cost / contribution % TFC = \$525000 Contribution % = 9 – 2.6 / 9 = 0.71 BE\$ = 525000 / 0.71 = \$ 738281 c) Net profit if 1 million CDs are sold Cost = \$9 * 1000000 – 525000 – (2.6 * 1000000) = 9000000 – 525000 – 2600000 = \$ 5875000 d) Necessary CD unit volume to achieve a \$200000 profit =? If 1000000 units sold had a net profit of \$ 5875000 then how many units should be sold to get \$ 200000 525000 + 200000 / 6.4 = 113281 units...
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Marketing Problem - = 82031 units Now we have to find BE\$...

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