50.1K

Verified Solution

Link Copied!

Product X is a consumer product with a retail price of $9.95. Retailer margins on the product are 40% and wholesaler's margins are 8% (based on the selling price). Total retail size of the market in which Product X competes is $300MM (MM stands for millions), and Product X's market share (in retail dollars) is 17.3%. Manufacturing fixed costs of Product X are $1,400,000 and the variable costs are $0.86 per unit. Product X spends $2,000,000 a year on advertising and has miscellaneous variable costs (shipping and handling) of $0.04 per unit. It pays its salespeople completely on commission at 12% of the manufacturer's selling price. Lastly, X's Product Manager has a salary of $90,000 a year. 5. Calculate the annual net profit in dollars (\$) for Product X. 6. Suppose Product X doubles its ad spending but still wants to maintain its current net profit. Calculate the increase in units needed to make up for the doubled ad spend while maintaining the same profit level (Q5=current profit level). 7. Suppose Product X reduces the manufacturer selling price by 25%. Calculate the increase in units needed to make up for that reduction while maintaining the same profit level (Q5=current profit level). 8. Suppose Product X changed its sales commission to 15% of manufacturer selling price. Calculate the increase in units needed to make up for the increased sales commission while maintaining the same profit level (Q5=current profit level)

Answer & Explanation Solved by verified expert

See Answer