Retail Selling Price Assignment
2. One of the first decisions you have to make as the brand manager for Flexo is whether or not to add a new line of razors, the “Super Flexo” line. This line would be marketed in addition to the original Flexo line. Your brand assistant has provided you with the following facts:
Retail selling price b. All margins the same as before Direct factory labor d. Raw materials Additional factory and administrative overheads a. $40 per unit C. $ 3 per unit $2 per unit $2 per unit (at a 50,000 unit volume level) e. f. Salespersons' commissions the same percent as before g.Incremental sales force travel costs h. Advertising for Super Flexo i. New equipment needed $50,000 $600,000 $500,000 (to be depreciated over 10 years $200,000 i. Research and development spent up to now k. Research and development to be spent this year to commercialize the product $500,000 (to be amortized over five years) Questions What is the contribution per unit for the Super Flexo brand? What is the break-even volume in units and in dollars? What is the sales volume in units necessary for Super Flexo to yield, in the first year, a 20 percent return on the equipment to be invested in the project? 1. 2. 3. 3. The $40 per unit selling price for Super Flexo seems thought you might lower the price to $37 per unit and raise retail margin to 25 percent high to you. You Question What is the break-even volume in units? 1. You have just been appointed the product manager for the “Flexo” brand of electric razors in a large consumer products company. As part of your new job, you want to develop your product. Your brand assistant has provided you with the following facts: an understanding of the financial situation for $30 per unit 20% 20% a. Retail selling price b. Retailer's margin Jobber's margin d. Wholesaler's* margin Direct factory labor f.Raw materials g. All factory and administrative overheads C. 15% $2 per unit $1 per unit $1 per unit (at a 100,000 unit volume level) 10% of manufacturer's selling price $200,000 $500,000 1 million units 210,000 units e. Salespersons' commissions h. . Salesforce travel costs j Advertising k. The total market for razors.Current yearly sales of Flexo An agent who sells to the jobbers, who in turn sell to the retailers. .