Kp Questions 1-9 Answers + Work
Autor: Sharon • January 22, 2018 • 1,356 Words (6 Pages) • 722 Views
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c.ii. Red-Away
c.ii.1. if reduced by 10%, it would be $0.90
c.ii.2. current contribution = $1,500,000 x 0.75
c.ii.3. current contribution = $1,125,000
c.ii.4. new contribution = $1,125,000 / 0.65 = 1,730,769 units
c.ii.5. 1,730,769 units x $0.90 = $1,557,692
4. Calculate the
a. price DCI will be selling its product to wholesalers
a.i. retailer price of can = $0.50, also 20% margin
a.ii. retailer cost = $0.50 / 1.20 = $0.42
a.iii. wholesaler cost = $0.42 / 1.10 = $0.38 per can
b. contribution per unit for Zap
b.i. contribution = sales – variable cost
b.ii. $0.38 - $0.18 - $0.06
b.iii. contribution per unit = $0.14
c. break-even unit volume in the first year
c.i. break even unit = (advertising + overhead + coupon) / Contribution
c.ii. (250,000 + 90,000 + [{(21,000,000 x .65) / 5} x .20 ]
c.iii. ($340,000 + 546,000) / 0.14
c.iv. break even = 6328571.42 units, rounded up to 6328572 units
d. first year break-even share of the market
d.i. total market is 21 million units and break even is 6328572
d.ii. (6328572 / 21000000), which is 30.136% of total market
5. Should VCI add the new model LX4 to its line of VCRs?
a. Initial
Model
LX1
LX2
LX3
Total
Demand/Year (units)
2000
1000
500
DVD Selling Price per unit
$175.00
$250.00
$300.00
Variable cost per unit
$100.00
$125.00
$140.00
Contribution per unit
$75.00
$125.00
$160.00
Total contribution
$150,000.00
$125,000.00
$80,000.00
$355,000.00
b. Proposed plan
b.i. 10% from LX1 (18 units), 30% from LX2 (54 units), 60% from LX3 (108 units), and LX4 at 300 units
Model
LX1
LX2
LX3
LX4 (proposed)
Total
Demand/Year (units)
1982
946
392
300
DVD Selling Price per unit
$175.00
$250.00
$300.00
$375.00
Variable cost per unit
$100.00
$125.00
$140.00
$225.00
Contribution per unit
$75.00
$125.00
$160.00
$150.00
Total contribution
$148,650.00
$118,250.00
$62,720.00
$45,000.00
$374,620.00
Less: fixed cost
$20,000.00
Profit
$354,620.00
Increase/Decrrease in Contribution
$19,620.00
Additional fixed cost
$20,000.00
Total loss
-$380.00
c. The new plan depicts that 60% of demand from the LX4 would come from the older models. Adding the intro of LX4 would lower profitability of the firm, giving a loss of $380. VCI should NOT introduce this product.
6. Should Leonard add the DC6900-X model to the line of personal computers?
a. The net profit without including the DC6900 Omega and DC6900 Alpha is $363,000,000. So yes, he should add the model.
DC6900-X
DC6900-Omega
DC6900-Alpha
Total
Sales Price per unit
3900
5900
2500
Unit variable cost
1800
2200
1200
Unit contribution
2100
3700
1300
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