Same level of contribution before the price decrease

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Reference no: EM131575357

Satellite imaging SD is concidering launching a new satelliet reciever that will be sold through major electrocic retailers. The initial investment that SD will nee to invest if they develope the Xgen1 is $7.8 million. Research suggests that high-end electronic sonsumers are willing to pay $695 for the HD reciever. The mark up for retailers is 28% on selling price, while wholesalers earn a margin of 9%. Other data as follows:

advertising $875,000

overhead $533,000

packagin $4.865/unit

components $197.56/unit

assembly of components $92.56

Supplemental goods $3.292

Calculate the following:

a. retailer cost

b. wholesaler cost

c. contribution per unit

d. unit gross margin

e. breakeven unit volume

Suppose that SD considered the possibilty of decreasing the retail selling price by 10%. How many additional units of the Xgen1 will need to be sold to achieve the same level of contribution before the price decrease? Under the current price structure the company expects to sell 15,000 units.

Reference no: EM131575357

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