Contribution analysis and break even analysis are surely
Question # 00036586
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Updated on: 12/14/2014 12:44 PM Due on: 12/31/2014
Paper should be written in an academic, research style suitable for presentation at a strategic meeting. The paper may be written with either APA or MLA style of referencing and should include a minimum of five (5) outside references, in addition to the text. The final paper should be a minimum of 5-7 pages, not including title page, executive summary, reference page, and/or appendices.
Happy Days is a producer of high quality organic yogurt, sour cream, and creme fraiche. They are considering marketing a new line of drinkable yogurt for children. The new yogurt will be offered in packages of six 6 ounce individual containers and it will be available in four favors.
The company plans to use TV and newspaper advertising to promote the new product. Distribution will be through major supermarket chains, which currently have over 90% of the US yogurt market. The suggested retail price for each 6 ounce container will be $.60. Because the retailer requires a 30 percent markup, happy Days' price to the supermarket will be $.40 per six ounce container. The unit variable costs for the product including packaging will be $.15
The company estimates it's advertising and promotion expense for the first year will be $1,500,000.
1. What is the contribution per unit for the children's yogurt product?
2. What is the break-even unit volume for the first year that will cover the planned advertising and promotion? The break even in dollars?
3. How many units of the yogurt must Happy Days sell to earn a profit of $800,000?
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Rating:
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Solution: Contribution analysis and break even analysis