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Last year, consumers spent $1,200,000 on a product category in which On-the-Spot is one brand. On-the-Spot costs a retailer $2 and normal retail margins for this type of product are 33%. On-the-Spot’s manufacturer is about to launch a nation-wide advertising campaign that will bring its fixed costs up to $200,000. Wholesaler margins are 25% and manufacturer margins are 66%. Margins are calculated as the percentage of each company’s own selling price.
A) What market share must On-the-Spot capture for the manufacturer to break even?
B) What market share must the product capture for the manufacturer to achieve a profit of $150,000?
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In March, Officer Smith retired and a retirement party was held for him at a downtown venue.
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