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Accordingly, management has decided to use newspapers $($rather than television$)$

and social media to promote Wham in the introductory year and distribute Wham in

major metropolitan areas that account for $65$ percent of U$.$S$.$ energy drink volume.

Newspaper advertising will carry a coupon that will entitle the consumer to receive

$$0\mathrm{.}75$ off the price of the first can purchased. The retailer will receive the regular

margin and be reimbursed for redeemed coupons by MegaGo. Past experience

indicates that for every five cans sold during the introductory year, one coupon will

be returned. The cost of the newspaper advertising campaign $($excluding coupons

$3$

returns$)$ will be $$1,250,000.$ Online marketing programs will cost $$750,000$ annually.

Other fixed overhead costs are expected to be $$650,000$ per year.

Management has decided that the suggested retail price to the consumer for the $8-$

ounce can will be $$1\mathrm{.}50.$ The only unit variable costs for the product are $$0\mathrm{.}65$ for

materials and $$0\mathrm{.}05$ for labor $($as well as any UVC burden caused by coupon

redemption$).$ The company intends to give retailers a margin of $20$ percent off the

suggested retail price and wholesalers a margin of $10$ percent of the retailers$$ cost of

the item.

a$.$ At what price will MegaGo be selling its product to wholesalers?

b$.$ What is the contribution per unit for Wham?

c$.$ What is the break$-$even unit volume in the first year?

d$.$ What is the first$-$year break$-$even share of market?

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