Essay About Unittotal Variable Cost And Units   Break

Solution for Finalcial Aspects of Marketing Management by Kotler & Keller
Answer 1A. $6.40B. Break even in units 82,031.25 units   Break even in dollars $738,281.25C. $5,875,000D. 113,281.25 unitsExplanation for Question 1A- Selling Price is $9Deduct Variable costs:CD Package and disk $1.25/unitSongwriter’s royalties $.35/unitRecording artist’s royalties $1.00/unitTotal Variable cost= 2.60Contribution per CD unit= Selling Price – Unit Variable cost. Therefore, 9-2.60= $6.40Explanation for Question 1B-Fixed Cost: Advertisement and promotion $275,000Studio recording overhead $250,000Contribution margin=Unit selling price- unit variable cost/ unit selling price= ($9-$2.60)/$9= .71111Contribution per CD unit = $6.40 (From A)Unit Break-even volume= Total dollar fixed cost/ unit selling price- unit variable cost.=$525,000/6.40= 82031.25 unitsBreak even in Dollars= Total fixed cost/contribution margin= 82,031.25*$9= $738,281.25Explanation for Question 1C-Net Profit= Total contribution-Total fixed costTotal Sales (1,000,000units*9$) = $9000000Less: Total Variable cost (1,000,000units*$2.60) = 2,600,000                                                                                    Answer 2A. Unit contribution= $7    Contribution margin= 58.3%B. Breakeven point in units= 25,000units     Breakeven point in Dollars= $300,172C. Market share= 29.3%Less: Total fixed cost 525,000Net profit= $5,875,000Explanation for Question 1D-Targeted profit= $200,000Fixed cost= $525,000Contribution per Unit= $6.40= $525,000 total dollar fixed cost + $200,000 dollar targeted profit/ contribution per unit $6.40=113,281.25 units.Explanation for Question 2ASelling price would be 20 (Suggested retail price)-8 (Retailer margin) =12$Variable cost per unit:Copy reproduction($4000/1000)= $4Royalties ($500/1000)= .50Label and package ($50/1000)= .50Total variable cost per unit= $5 Unit contribution= $12-$5= $7Contribution margin= $7/$12= .583 or 58.3%