Mike Foster, marketing manager for Big Time SportsProducts, Inc. (BTSP), is thinking abouthow the changes taking place among retailers in his channel mightimpact his strategy.BTSP is a producer ofdifferent lines of sports products. Mike is looking for alternativeways to make money.
Mike is considering a new strategy to increase sales of tennisballs and a new tennis rack. The basic idea is to sell tennis ballsin large quantities to nonprofit groups who resell the balls toraise money. For example, a service organization at a local collegebought 2,000 tennis balls printed with the college logo.BTSP charged $.50 each for the tennis balls-plus a$500 one-time charge for the stamp to print the logo. The servicegroup plans to resell the tennis balls for $2.50 each andcontribute the profits to a shelter for the homeless.

Questions (10pts.)
What is the service organization's average costper printed tennisball? __________________________

What is the total profit the service group hopes to make if itsells all 2000 tennis balls at $2.50 perball.__________________.

BTSP is considering adding tennis racquets tothe product lines it produces. This would require a $500,000modification to its factory as well as the purchase of newequipment that costs $1,500,000. The variable cost to produce atennis racquet would be $45, but Mike thinks thatBTSP could sell the racquet at a wholesale priceof $60. However, Dr. Pointer thinks that the tennis racquet is asuperior product and thatBTSP should sell itfor$99.99 to upscale country clubs only.   The higherprice would give a prestige image. However, ifBTSP sells the racquet at the lower price, manyother retailers might decide to carry it.
Questions (15 pts)

If BTSP produces tennis racquets, how manyracquets must it sell at $60.00 and $99.99 to breakeven?             Breakeven units at 60.00 _______________________________.

                                  Breakeven units at 99.00 _______________________________.

Which price do you recommend and why?__________________________

Question (5 pts)

If BTSP wants to make at least $35,000 profit off the racquets,at a selling price of $60.00 what would the breakevenquantitybe__________________________

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