Posted: September 11th, 2015

# Variable Costs and Fixed Costs Problem.

 Variable Costs and Fixed Costs Problem   OUV has spent \$2,000,000 in R&D to develop a new product. The company plans to sell the product for \$10 per unit. It will cost \$2 in materials and \$1 in labor to produce each unit. OUV plans to run an advertising campaign at a cost of \$20,000. The advertising campaign will include a \$2 coupon inserted in Sunday newspapers. OUV expects 15% of its sales to be made with a coupon. It also plans to send a postcard to 5,000 customers on a mailing list at a cost of \$.50 each. OUV plans to hire one sales representative at a salary of \$50,000 per year plus a 5% commission. OUV’s rent and utilities will be \$15,000 per month, and its administrative and clerical expenses are budgeted at \$120,000 per year.   What are the relevant annual fixed costs? What are the variable costs per unit?
 Gross Margin Problem What is the company’s gross profit margin in dollars? What is the company’s unit contribution in dollars? What is the company’s contribution margin percentage?
 Trade Margin Percent of Selling Price Problem What price will the wholesaler sell the item to the retailer? What price will the manufacturer sell the item to the wholesaler? What is the manufacturer’s gross margin percentage?
 Trade Margin Markup over Cost Problem What price will the manufacturer sell the item to the wholesaler? What price will the wholesaler sell the item to the retailer? What price will the retailer sell the item to the consumer?

 Margin Analysis Problem Based on margin analysis, what product will ZYX prefer consumers buy, its higher priced Product 1 or its lower priced Product 2? Based on margin analysis, what product will retailers prefer customers buy Based on margin analysis, is the retailer more likely to promote ZYX’s Product 2 or PQR’s Product?
 Pro Forma Income Statement Problem Complete the pro forma income statement below. Marketing expenses represent what percentage of sales? Total Breakeven Value Problem What is the breakeven volume in units for ZYX? What is the breakeven dollars for ZYX?

 IBEV for Change in Fixed Cost Problem   What is the breakeven volume in units for the increase in advertising?
 IBEV for Change in Contribution Problem How much must sales increase in units in order for ZYX to breakeven on the price cut?
 IBEV for Complex Changes Problem   How much must sales increase in units in order for ZYX to breakeven these changes?

 Segment Value Problem What is the market size in units? What is the market size in revenue in retail dollars? What is the segment value of the product category for ZYX?
 Market Share Problem What is the retail revenue market share for ZYX?

 Breakeven Market Share Problem What is the dollar breakeven market share for Product 1?  What is the dollar breakeven market share for Product 2? Based on breakeven market share, which product should they launch?

 Cannibalization Problem How will the introduction of the new gel toothpaste affect Brand X’s total contribution dollars?
 BECR Problem What is the BECR for the new product?
 Economic Value to the Customer Proble What is the economic value of the ABC service contract for ZYX? Based on the EVC should ZYX should be willing to buy the service contract? Looking for the best essay writer? Click below to have a customized paper written as per your requirements.

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