On-the-spot capture for the manufacturer to break even

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Reference no: EM132224312

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?

Reference no: EM132224312

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