Question

Marketing by the Numbers Exercise Set One Now that you've studied pricing, break-even, and margin analysis as they relate to Connect Phone's new-product launch, use the following exercises to apply these concepts in other contexts. 1.1 Sanborn, a manufacturer of electric roof vents, realizes a cost of $55 for every unit it produces. Its total fixed costs equal $2 million. If the company manufactures 500,000 units, compute the following: a. unit cost b. markup price if the company desires a 10 percent retum on sales C. ROI price if the company desires a 25 percent return on an investment of $1 million 1.2 An interior decorator purchases items to sell in her store. She purchases a lamp for $125 and sells it for $225. Determine the following: a. dollar markup b. markup percentage on cost c. markup percentage on selling price 1.3 A consumer purchases a toaster from a retailer for $60. The retailer's markup is 20 per- cent, and the wholesaler's markup is 15 percent, both based on selling price. For what price does the manufacturer sell the product to the wholesaler? 1.4 A vacuum manufacturer has a unit cost of $50 and wishes to achieve a margin of 30 per- cent based on selling price. If the manufacturer sells directly to a retailer who then adds a set margin of 40 percent based on selling price, determine the retail price charged to consumers. 1.5 Advanced Electronics manufactures DVDs and sells them directly to retailers who typically sell them for $20. Retailers take a 40 percent margin based on the retail sell- ing price. Advanced's cost information is as follows: DVD package and disc $2.50/DVD Royalties $2.25/DVD Advertising and promotion $500,000 Overhead $200,000 Calculate the following: a. contribution per unit and contribution margin b. break-even volume in DVD units and dollars c. volume in DVD units and dollar sales necessary if Advanced's profit goal is 20 per- cent profit on sales d. net profit if 5 million DVDs are sold

Answer 1

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