Marketing

retail price

less retailer margin

equals retailer cost

less wholesaler margin

equals wholesaler cost

less modern food margin

equals modern food’s cost

problem 2

a) cont. per unit = selling price - UVC

= $9 - $2.60

= $6.40

b )

i) B/E vol in units = TFC / unit contribution

= $525,000 / $6.40

= 82,031 units

ii) b/3 volume x sp

= 82,031 x $9

= $738,281

c) net profit @ 1 mil CDs (np)

NP - TR - TC

= TC - TVC - TFC

@ 1M CDs,

tot rev = 1M x selling price

tot rev = 1m x $9 - $9m

TVC =

UVC

materials $1.25

SW royalties $0.35

Artists $1.00

TOT $2.60

Fixed cost

Ad / Promo 275,000

Overhead $250,000

TOT is $525,000

TR = 1M x $9 = $9M

TVC = 1M x $2.60 = $2.6M

TFC = $525,000

so NP = $9M - $2.6M - $525,000

= $9M - $2,075,000

= $6,925,000 (WRONG) right and is $875,000

CD volume to achieve $200k profit = )tic + $200k) /unit contribution

= ($525,000 + $200,000) / $6.40

= 113,281

= B/E units + units to generate $200k

= 81,031 + (200,000 / $6.40)

= 82,031 + 31,250

= 113,281

problem # 3

a) retail price = (dollar market size / mkt size in units)

= $220,000,000 / 2,000,000

=$110

b ) retailer’s margin percent

= retailer’s margin / retailer’s price

= = (retailer price - retailer cost) / retailer price

= ($110 - $60) / $110

= 45.45%

c ME’s contribution per unit

= SP - UVC

= $60 - $24

= 36

d) ME/s contrib margin

= unit contrib / sp

= $36 / $60

=60%

e) B/E vol in units

= TFC / unit contribution

= $3M / $36

= 83,333

f) B/E vol (dollars0

= B/E units x SP

= 83,333 x $60

~ $5M

g) tot cont @ forecast sales of 250k

= unit cont x forecasted sales

= $36 x 250,000

= $9M

h) B/E share of market

= B/E volume in units / total market size in units

OR B/E volume in dollars / tot mkt size in dollars