Marketing Arithmetic Exercise Calculations

Marketing Arithmetic Exercise Calculations

Initial Data: Margin Structure Factors: Retail Price: $ Retail Margin/Unit: Wholesale Margin/Unit: Variable Mfg. Cost/Unit: $ Shipping, etc./Unit: $ Commissions: 1.00 33% 12% 0.09 0.02 10% Market Factors:

Variable Cost Factors:

Fixed Cost Factors:

Question 1: What is the unit contribution for Brand X? Key Formulas: Wholesale Selling Price = Retail Price x (100% - Retail Margin/Unit) Manufacturer's Selling Price = Wholesale Selling Price x (100% - Wholesale Margin/Unit) Commissions/Unit = Commission x Manufacturer's Selling Price Contribution per Unit = Manufacturer's Selling Price - Variable Costs/Unit Step 1: Determine Manufacturer's Selling Price Wholesale Selling Price: $ 99.67

Manufacturer's Selling Price: $

87.71

Step 2: Determine Total Variable Costs Variable Mfg. Cost/Unit: $ Shipping, etc./Unit: $ Commission/Unit: Total Variable Costs per unit: $ Step 3: Determine Unit Contribution Unit Contribution: $ Question 2: What is Brand X's break-even point? Key Formula: Breakeven Units = Fixed Costs divided by Unit Contribution Fixed Costs: $ Breakeven Units: 900,000.00 11,418 78.82 0.09 0.02 878% 8.89

Question 3: What market share does Brand X need to break even? Key Formula: Breakeven market share = Breakeven Units divided by Total Units in Market Breakeven Market Share: Question 4: What is Brand X's profit impact? Key Formulas: Unit Volume = Total Units in Market x Market Share Profit Impact = (Unit Volume x Unit Contribution) - Fixed Costs Unit Volume: 4,800,000.00 Profit Impact: $ 369,336,000 0%

Total Units in Market: Brand X Market Share:

20,000,000 24%

Fixed Mfg. Costs: $ Advertising Budget: $ Prod. Mgr. Salary: $

900,000 500,000 35,000