What is the company breakeven in dollars

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Reference no: EM13271212

Innovation products international is a health foods company which recently discovered that increasd soy isoflavones (at least 500 mg every 2 days) in a person's diet has been able to extend a person's life span by at least 20 years. The company developed a new product called "Soy for Life", which is a tasty breakfast bar that contains 500 mg of soy isoflavones in each bar. Cost of research and development for the product was $2,250,000. The breakfast bar market size is currently measured at 80 million units of which IPI serves 45%. Initial taste tests concluded that consumers are unable to make any taste distinctions between a regular breakfast bar and one that contains 500 mg of isoflavones. IPI plans to lunch this new breakfast bar initially across the United States using its current distribution channel of supermarket chains and health food stores which have 5,000 locations combined.

Innovation Product International's fixed costs is currently $1 million per year with the cost to produce each breakfast bar at 1.25$. The finding of several research studies has determined that consumers would be willing to pay 8.25$ for Soy for Life breakfast at which the retail selling price would be targeted. The retailer margine is 35% and then wholesale margin is 15%.

a. What is the company's selling price of one Soy for Life breakfast bar to its wholesalers? (from my calculations its 4.125$)
b. What is the product's contribution margin as a percentage?
c. What is the product's contribution per unit in dollars?
d. What is the company's breakeven in units?
e. What is the company's breakeven in dollars?
f. What is the company's breakeven sahre of market as a percentage?

Reference no: EM13271212

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