1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
natali 33 [55]
3 years ago
10

Horatio Alger has just become product manager for Brand X. Brand X is a consumer product with a retail price of $1.00. Retail ma

rgins on the product are 33%, 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. Shipping costs, breakage, insurance, and so forth are $0.02 per unit.
1. What is the unit contribution for Brand X?
2. What is Brand X's break-even point?
3. What market share does Brand X need to break even?
4. What is Brand X's profit impact? Industry demand is expected to increase to 23 million units next year. Mr. Alger is considering raising his advertising budget to $1 million.
a. If the advertising budget is raised, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell in order for it to achieve the same profit impact that it did this year?
c. What will Brand X's market share have to be next year for its profit impact to be the same as this year?
d. What will Brand X's market share have to be for it to have a $1 million profit impact?
5. Upon reflection, Mr. Alger decides not to increase Brand X's advertising budget. Instead, he thinks he might give retailers an incentive to promote Brand X by raising their margins from 33% to 40%. The margin increase would be accomplished by lowering the price of the product to retailers. Wholesaler margins would remain at 12%.
a. If retailer margins are raised to 40% next year, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell to achieve the same profit impact next year as it did this year?
c. What would Brand X's market share have to be for its profit impact to remain at this year's level?
d. What would Brand X's market share have to be for it to generate a profit impact of $350,000?
Business
1 answer:
german3 years ago
4 0

Answer:

Horatio Alger

1. The unit contribution for Brand X is = $0.79

2. Brand X's break-even point (in units) = 1,816,456 (in sales dollars) = $1,816,456

3. The market share that Brand X needs to break-even

= 9.1%

4. Brand X's profit impact is 48.9% or $2,347,000

a. If the advertising budget is raised, units that Brand X have to sell to break-even is:

= 2,449,367 units

b. The units that Brand X have to sell in order for it to achieve the same profit impact that it did this year is:

= 5,865,886 units

c. Brand X's market share have to be 25.5% next year for its profit impact to be the same as this year.

d. Brand X's market share have to be 16.2% for it to have a $1 million profit impact.

5. a. Break-even sales units = 2,474,138 units

b. Break-even sales units = 6,520,690 units

c. Brand X's market share have to be 32.6% for its profit impact to remain at this year's level.

d. Brand X's market share have to be 15.4% to generate a profit impact of $350,000.

Explanation:

a) Data and Calculations:

Retail price of Brand X = $1.00

Units sold = 24% of 20 million = 4,800,000 units

Total sales revenue =              $1.00  $4,800,000

Variable costs:

Manufacturing                         $0.09

Selling commision (10% of $1) $0.10

Other selling expense            $0.02

Total variable costs per unit   $0.21  $1,008,000

Contribution margin per unit $0.79  $3,782,000

Fixed costs:

Manufacturing                $900,000

Advertising                       500,000

Brand X manager's salary 35,000    $1,435,000

Net income =                                     $2,347,000

Fixed costs/Contribution margin per unit = $1,435,000/$0.79 = 1,816,456 units

The market share that Brand X needs to break-even

= 1,816,456/20,000,000

= 9.1%

Brand X's profit impact = 48.9% ($2,347,000/$4,800,000 * 100)

With increase in advertising budget to $1 million next year,

a. Units to break-even = $1,935,000/$0.79 = 2,449,367 units

b. Units to achieve same profit impact:

Sales increased by 15% (3/20 * 100)

Net income will increase to = $2,699,050 ($2,347,000 * 1.15)  to make the same impact

Therefore, the units to achieve same profit impact = ($1,935,000 + $2,699,050)/$0.79

= $4,634,050/$0.79

= 5,865,886 units

Market share next year = 25.5% (5,865,886/23,000,000)

Market share to achieve $1 million profit impact

= (FC + Profit target)/$0.79

=  $1,935,000 + $1,000,000)/$0.79

= $2,935,000/$0.79

= $3,715,190

= $3,715,190/$23,000,000 * 100 = 16.2%

Fixed costs = $1,435,000

Retailer's margin raise = 40% from 33%, a 21.2% increase or decrease in price

Therefore, the new selling price = $1.00 * (1 - 0.212) = $0.79

Variable cost = $0.21

Contribution margin = $0.58

To break-even, FC/Contribution margin per unit

= $1,435,000/$0.58

= 2,474,138 units

Break-even units to achieve profit of $2,347,000 = ($1,435,000 + $2,347,000)/$0.58

= 6,520,690 units

Sales = $5,151,345 (6,520,690 * $0.79)

Market sales revenue = $15,800,000 (20,000,000 * $0.79)

= $5,151,345/$15,800,000 * 100

= 32.6%

Market impact of $350,000

Break-even units ($1,435,000 + $350,000)/$0.58

= 3,077,586 units

Sales revenue = $2,431,293 (3,077,586 * $0.79)

Market revenue = $15,800,000 (20,000,000 * $0.79)

Market share = $2,431,293/$15,800,000 * 100

= 15.4%

You might be interested in
Carly deposited $800 in an account that earns 6% compounded annually. Lara deposited $800 in an account that earns 6% simple int
LiRa [457]

Answer:

Carly will have $1,433 in her account at the end of 10 years.

Lara will have $1,280 in her account at the end of 10 years.

Explanation:

Simpe interest pays the simple trust on the principal amount. There is no reinvestment of interest.

In compounded Interest the Interest earned from the investment is reinvested and again interest on principal and interest amount reinvested is earned.

Carly Deposit balance

Principal amount = $800

Blance after 10 years = $800 ( 1+ 6% )^10 = $800 x 1.791 = $1,433

Lara Deposit balance

Principal amount = $800

Amount of Interest for 10 years = 800 x 6% x 10 = $480

Blance after 10 years = $800 + $480 = $1,280

7 0
2 years ago
A publicly owned corporation is a company whose shares are held by the investing public, which may include other corporations as
Lubov Fominskaja [6]

Answer:

True

Explanation:

A publicly owned corporation is a company is a company owned by shareholders. This type of company's shares is freely traded on a stock exchange

Characteristics of A publicly owned corporation

  • Limited liability. the liability of owners are limited to the amount invested
  • Central management. The company is manged by board of directors and managers and not the shareholders
  • the company is a legal entity.
6 0
3 years ago
I want to take a survey of students at my university to find out what proportion like the new bus service on campus. how many wi
laiz [17]

Answer:

N = 3,120 (Approx)

Explanation:

Given:

z- score for 99% confidence = 2.58

Proportion (P) = 75% = 75 / 100 = 0.75

E = 2% = 0.02

Q = 1 - P = 1 - 0.75 = 0.25

Computation:

N = (Z/E)^2 \times pq

N = (2.58/0.02)^2 \times (0.75 \ times 0.25)

N = (129)^2 \times (0.1875)

N = (16,641) \times (0.1875)

N = 3,120.1875

Therefore, N = 3,120 (Approx).

5 0
3 years ago
Pepe, Incorporated acquired 60% of Devin Company on January 1, 2017. On that date Devin sold equipment to Pepe for $45,000. The
krek1111 [17]

Answer:

The loss on equipment recognized by Devin on its internal accounting records for 2017 is $9,000

Explanation:

By using the given information which is mentioned in the question, first we have to calculate the book value of equipment.

So, the book value of the equipment is equals to

= Cost price - accumulated depreciation

= $120,000 - $66,000

= $54,000

Now we can calculate the loss or gain on sale of equipment which is equals to

= Sale price - book value

= $45,000 - $54,000

= - $9,000

Since, the amount shows negative which means the company has suffered a loss of $9,000 on equipment

The other things like net income of 2017 and 2018 is irrelevant because it tells the net income of overall company not for equipment. So, it is not being considered while computation

Hence,  the loss on equipment recognized by Devin on its internal accounting records for 2017 is $9,000

7 0
3 years ago
Carl is a self-employed real estate agent. For the current year, his self-employment net earnings (revenues minus expenses) are
lisov135 [29]

Answer:

$12,240

Explanation:

Social security Tax = $80,000 x 12.4%

Social security Tax = $9,920

Medicare Tax = $80,0000 x 2.9%

Medicare Tax =  $2,320

Total tax = $9,920 + $2,320

Total tax = $12,240

3 0
3 years ago
Other questions:
  • The front office staff at marriott hotels has a preshift meeting at 7:00 am every morning. as general manager, you are expected
    5·1 answer
  • The XYZ car manufacturing company is advertising its new hybrid vehicle. It understands that its competition, Toyota's hybrid ca
    13·1 answer
  • Once something is considered scarce, it is scarce forever. <br> A. True<br> B. False
    9·1 answer
  • A department store decides to use "secret shoppers" at unannounced times to test for service quality among its personnel. Store
    15·1 answer
  • How many times is income from a c corporation taxed if a retirement fund is the owner of the corporation's' stock?
    8·1 answer
  • How can you make sure you use the appropriate etiquette while being aware of : the organizational structure, values within, meth
    5·1 answer
  • Consider the economy of Freeland, whose overall actual price index and actual output are P and Y respectively, and the natural r
    11·1 answer
  • On April 2, Rolex SA sold $40,000 of inventory items on credit with the terms 1/10, net 30. Payment on $24,000 of sales was rece
    13·1 answer
  • The standard amount of materials required to make one unit of Product Q is 4 pounds. Tusa's static budget showed a planned produ
    10·1 answer
  • There are many different sources of income. Usually, most of an adult's income comes from _____.
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!