Total market for Microwave Ovens 5 million units
Current yearly sales of Zig brand 750,000 units
Direct factory labor $13.20 per unit (VC)
Salesperson's Commissions $50 per unit (VC)
10% of Manufactures Selling Price (VC)
All factory and administrative overheads $2,000,000 (FC)
Retail selling price $300 per unit
Retailers margin 20%
Jobber's margin 20%
Wholesaler's margin 15%
Sales travel expenses $800,000 (FC)
Advertising $3 million (FC)
Distribution channel is Manufacturer Wholesaler Jobber Retailer
In order for you have the correct answers for the following six questions you must determine the selling price for the manufacturer, The selling price for the manufacturer is $163.20. Please show all calculations that end up with the selling price based on the information above.
1. What is the contribution per unit for the Zig brand? Answer ____________________
2. What is the break even volume in units and in dollars? Answer ___________________
3. What market share does the Zig brand need to break even? Answer _______________
4. What is the current total contribution? Answer ________________________________
5. What is the current before tax profit of the Zig brand'? ___________________________
6. What market share must Zig obtain to contribute a before tax profit of $100 million?
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