Reference no: EM132894948

AAB is located in Vancouver, BC. AAB accounts for 6.43% of the total annual market of 156,237 solid-state backup storage devices. AAB's profit margin for retailers is 36.4% of $1234.00 per storage device.

Smith, the head of AAB, estimates that the variable cost of each storage unit is US$326.21 and the annual fixed cost is US$178,234. In addition, the shipping and packaging costs paid by AAB are US$25.12 per unit. The management fee is $295,000 per year, the annual advertising budget is $232,000, the company has a salesperson, and the salary is $97,000 (no commission percentage)

1. What is fixed cost?
2. What is unit variable cost?
3. What is margin?
4. What is a break-even measurement unit. Round to the nearest whole number?
5. What is the market share required to achieve breakeven?
6. What is the current profit and loss?
7. The vice president of marketing believes that AAB can sell 12% more storage devices than the current advertising budget of $25,000. In addition, if she lowers her advertising budget but reduces it by $25,000, she estimates that her sales will decrease by 121 sets.
One. If the advertising budget is increased, what will be the balance of payments on a unit basis?
b. If the advertising budget is reduced, what will be the unit break-even point?
8. In addition to changing advertising expenditures, AAB is considering providing a free storage file classifier for each storage device sold. The cost of these sorters is $52 per AAB. If this promotional offer can increase the sales of storage devices by 280 units, what will the profit change?
9. What advice do you have for the vice president of marketing? Change ad spend (increase or decrease) or provide file classifier as "promotion" or "do nothing." Need to elaborate on why?