What is discus unit contribution and breakeven point

Assignment Help Financial Management

Reference no: EM131564223

Peter Smart is product manager for Discus, a consumer durable manufactured by Advance Technologies that sells for a retail price of $100. Average retailer margins on Discus are $33, while average wholesaler margins are $8. Advance Technologies and its direct competitors sell a total of 200,000 units annually, with Discus leading the highly competitive market with a 24% market share. Variable manufacturing costs for Discus are $9 per unit. Fixed manufacturing costs are $900,000. The advertising budget for Discus is $465,000 and Peter’s salary and expenses total $70,000. Advance Technologies employs salespeople who sell the product to wholesalers and are paid entirely by commission (10%). Discus shipping costs, breakage, insurance, and related expenses amount, on average, to $2 per unit. Given the preceding information, answer the following questions:

- What is Discus’ unit contribution & breakeven point?

- What market share does Discus need to break even?

- Should Peter permanently decrease Discus’ price by 10% in an attempt to capture an even larger share of the market? Why or why not? (Assume retailer and wholesaler margins remain the same when answering this question).

Reference no: EM131564223

Questions Cloud

Calculate the equivalent uniform annual cost : Calculate the equivalent uniform annual cost (EUAC) of the waste treatment plant using an interest rate of 2%, compounded annually.

Calculate equivalent uniform annual worth of delivery system : Calculate the equivalent uniform annual worth of the delivery system over 6 years.

Capital structure as follows-cost of equity : Fairmont Industries in Homework 10.35 changed its capital structure as follows. Cost of Equity at 10% per year.

How much did the company initially loan to the supplier : The Dawes Company has loaned a large amount of money to one of its suppliers. how much did the company initially loan to the supplier?

What is discus unit contribution and breakeven point : What is Discus’ unit contribution and breakeven point. What market share does Discus need to break even?

Management is considering running similar promotion : In an attempt to improve store revenues during the holiday shopping season, Management is considering running a similar promotion in 2012.

Scanner will be depreciated as three-year property : You work for nuclear research laboratory that is contemplating leasing diagnostic scanner. Assume that scanner will be depreciated as three-year property.

What is the percentage cost of preferred stock : What is the percentage cost of the preferred stock?

Define the long-term financing needed : What was Wallace's total long-term debt in 2016? What were Wallace's total liabilities in 2016?

User Account

All Pages