Submitted by: Submitted by mky777
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Category: Business and Industry
Date Submitted: 07/09/2011 07:32 AM
Running head: Financial Aspects of Marketing Management
Financial Aspects of Marketing Management
Shih Ming Chang
Grand Canyon University
MKT 450
June 26, 2011
1.)
CD package and disc (direct material and labor) = $1.25/CD
Songwriters’ royalties = $0.35/CD
Recording artists’ royalties = $1.00/CD
Advertising and promotion = $275,000
Studio Recordings Inc’s overhead = $250,000
Selling price to CD distributor = $9.00
a.) Contribution per CD unit = unit selling price – unit variable cost
= $9.00 - $1.25 - $0.35 - $.100
= $6.4
b.) Break-even volume in CD units = Total dollar fixed costsContribution per unit
= $275,000+$250,000$6.4 = $525,000$6.4
= 82,031 CDs
Break-even volume in CD dollars = Break-even volume * unit selling price
= 82,031 * $9.00 = $738,279
c.) Net profit (1 million CDs sold) = sales revenue – total costs
= ($9.00 * 1,000,000) – (($1.25+0.35+$1.00)*1,000,000) - ($275,000 + $250,000))
= $9,000,000 - $2,600,000 - $525,000
= $5,875,000
d.) Necessary CD unit volume to achieve a $200,000 profit = total dollar fixed costs + dollar profit goalcontribution per unit
= $275,000 + $250,000 + $200,000$6.4 = $725,000$6.4
= 113,281 CDs
2.) Project investment = $150,000
Film unit volume = 100,000 units
Cost of distribution rights = $125,000
Label design = $5,000
Package design = $10,000
Advertising = $35,000
Reproduction of copies (per 1,000) = $4,000 or $4.00/copy
Manufacture of labels and packaging (per 1,000) = $500 or $0.5/copy
Royalties (per 1,000) = $500 or $0.5/copy
Retail price = $20/film
Retailer’s margin = 40%
a.) Contribution per unit = unit selling price – unit variable cost
= $20 - $4 - $0.5 - $0.5 = $15
Contribution margin = unit selling price – unit variable costunit selling price
= $15$20 = 0.75
b.) Unit break-even volume = total dollar fixed costsunit selling price – unit variable costs
= $125,000 + $5,000 + $10,000 + $35,000 $15
= $175,000$15 = 11,667 films
Unit...