Answer:
i.The total number of a company sell if it desires a 10% share of this market? is 40,000 units
ii. The % of the market supplies that should capture to break even is 5%
Explanation:
To calculate break even point in unit, use the formula;
Fixed Cost / Contribution Margin.
In this question, Fixed cost is the factory lease cost of one year for $400,000
Contribution margin is the difference betwen Selling Price and Variable Cost.
This will be $50-$30=$20
Therefore, Break even point in unit = $400,000 divided by $20
this will give 20,000 units.
20,000 units is 5% of the market size of (200,000X2) 400,000 units.
I.e. (20,000/400,000)X100=5%
