What is the product contribution margin as percentage

Assignment Help Financial Management

Reference no: EM131991826

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? (note selling price is not 8.25$)

b. What is the product's contribution margin as a percentage?

c. What is the product's contribution per unit in dollars.

Reference no: EM131991826

Questions Cloud

Hypothetical weights of pi for the target incentive system : Which of the hypothetical weights of pi for the target incentive system w = s + bp, is likely most efficient from the principal's perspective?

Explain the importance of each quadrant : Conducting both analyses allows the planner an opportunity to consider all factors relevant to the success of the organization.

Explain the effect of inflation on the rate of return : Explain the effect of inflation on the rate of return. Explain the term "term structure of interest rates".

Deferred taxes is either a prepaid expense or a liability : Write the answer in 5 to 7 sentences. Deferred taxes is either a prepaid expense or a liability? The response must be typed.

What is the product contribution margin as percentage : What is the company's selling price of one Soy for Life breakfast bar to its wholesalers? What is the product's contribution margin as a percentage?

Are there particular circumstances under which it is : Are there particular circumstances under which it is, or is not, appropriate for employers to monitor employee behavior? Discuss two (2).

Conflict between the economic goals of growth and equity : Many economists believe there is a conflict between the economic goals of growth and equity. Do you agree or disagree? Provide your reasons.

What is the deadweight loss associated with the positive : Flu shots have a constant marginal cost of production of $3 per shot. What is the deadweight loss associated with the positive externality?

Describe the roles of the world bank : Describe the roles of the World Bank (WB), International Monetary Fund (IMF), and World Trade Organization (WTO) in the acceleration of globalization.

User Account

All Pages