What are the break-even points for both marketing options

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Reference no: EM131020387

You have started a business that sells a home gardening system that allows people to grow vegetables on their kitchen countertop. You are considering two options for marketing your product. The first is to advertise on local TV. The second is to distribute flyers in the local community. The TV option, which costs $50,000 annually, will promote the product more effectively and create a demand for 1,180 units per year. The flyer advertisement option costs only $6,000 annually but will create a demand for only 300 units per year. The price per unit of the indoor gardening system is $105, and the variable cost is $69 per unit. Assume that the production capacity is not limited and that the marketing cost is the only fixed cost involved in your business.

What are the break-even points for both marketing options? (Round answers to nearest whole units, e.g.125.)

A) The break-even point for TV advertisement is ______________ units.

B) The break-even point for flyer option is _______________ units.

Which one would you choose?

C) You should choose the? flyer option or tv advertisement?

Reference no: EM131020387

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