Reference no: EM132465326

Sunbelt Iron

Retail Selling Price                                 $50.00

Retailer's Margin                                   25%

Jobber's Margin                                     15%

Wholesaler's Margin                               20%

Direct Factory Labor                              $3 per unit

Raw Materials                                       $2 per unit

Administrative Overhead                        $2 per unit (at a 100,000-unit volume level)

Salespersons' Commissions                     20% of manufacturer's selling price

Sales Force Travel Costs                      $100,000

Advertising                                         $250,000

New Equipment Needed                        $200,000 (to be depreciated over 5 years)

R&D spent up to now                           $600,000

R&D to be spent this year                      $100,000 (to be amortized over 5 years)

Total Market                                       500,000 units

Current Yearly Sales                             200,000 units

Question 1. What is Sunbelt's (the manufacturer) selling price?

Question 2. What is Sunbelt's variable cost per unit?

Question 3. What is Sunbelt's total fixed cost?

Question 4. What is the contribution per unit for the Sunbelt?

Question 5. What is the break-even volume in units?

Question 6. What is the break-even volume in dollars?

Question 7. What market share does Sunbelt need to break-even?

Question 8. What is the current total unit contribution?

Question 9. What is the current before-tax profit of the Sunbelt brand?

Question 10. What market share must the Sunbelt brand obtain to contribute a before-tax profit of $2,000,000?