Reference no: EM132953171
Question - Mr. Tidy is new brand producing a cleaning gel. This product is distributed by a network of retailers. Mr. Tidy is considering three alternative strategies in order to reach the profit of $6,700,000 in 2021.
Retail price: $8.00
Retail margins (on selling price price): 20%
Cost of material: $1.25 per unit
Packaging and labeling: $0.25 per unit other variable cost: $0.75 per unit
Fixed manufacturing costs: $725,000 / year
Marketing budget: $825,000 / year
Required -
A) How many units they should sell to reach their profit goal?
B) A retail chain called HouseMart offers Mr. Tidy a new contract. According to this contract, Mr. Tidy sells its cleaning gel exclusively through HouseMart. In return, Mr. Tidy only pays $140,000 for marketing instead of $840,000; but they need to increase the retail margin to 40%. Mr. Tidy is interested in this contract if they can make $1,000,000 more in profit at the end if the first year of the contract. How many products should they negotiate with HouseMart?
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