Reference no: EM132523979

Question - Jane Austin is brand manager for Majikbrand individually-wrapped ice cream bars, which are sold at grocery and convenience stores. Majikproduces and sells only one size bar, featuring rich vanilla ice cream encased in a deep chocolate coating. The bars sell for a retail price of $2.00. Retail margins on the product are 35%, while wholesalers take a 25% margin.

In 2019 Majikand its direct competitors sold a total of 25 million ice cream bars (units) and Majikbrand had a 22% unit share of this market.

Variable manufacturing costs for Majikice cream bars were $0.18 per unit in 2019. Fixed manufacturing costs were $1,600,000. The advertising budget for Majikbrand was $750,000. The Majikbrand manager's salary and expenses totaled $135,000. Majiksalespeople were paid entirely by a 15% commission on the sales revenue they generate forMajik. Shipping costs, spoilage, insurance, and so forth for the ice cream bars totaled $0.05 per unit.

SHOW ALL WORK PLEASE

1. What was the unit contribution for Majikbrand bars in 2019? (round to the nearest cent)

2. What was Majik's break-even volume in 2019? (round to the nearest whole unit)

3. What unit market share did Majikneed to break even in 2019? (round to the nearest %)

4. What wasMajik's profit in 2019? (round to the nearest dollar)

5. Despite coronavirus issues, Industry demand is expected to increase to 29 million units in 2020. Ms. Alger is considering raising her advertising budget to $2 million.

a. if the advertising budget is raised, how many units will Majik have to sell to break even?

b. how many units will Majik have to sell for it to achieve the same profit that it did in 2019?

c. what will Majik's market share have to be in 2020 for it to achieve the same profit that it did in 2019?

d. What will Majik's market share have to be in 2020 for it to have a $1.5 million profit?