Question

SC Johnson distributes their OFF! Clip•on™ product through retailers. They suggest the retailer sell each OFF! Clip•on ™ for $7.99. The retailer purchases the OFF! Clip•on™ from SC Johnson for $4.99 (wholesale price) and SC Johnson’s variable costs are $3.00.

a) What is SC Johnson’s contribution margin?

b) What is the retailer’s contribution margin?

c) Determine the volume hurdle for a retailer if they decrease the retail price by 15%? Please show your calculations.

Answer 1