CVP Analysis
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Please see the attachment for the details. I am seeking the right formulas and some help in answering these 6 questions. I have search the internet for examples and coming up with no luck. I appreciate your help in attaining the solutions to these questions.
As the Marketing Manager for the Zig brand of microwave ovens in a large consumer products company you must answer the questions found below with the following financial information regarding your product.
Total market for Microwave Ovens 5 million units
Current yearly sales of Zig brand 750,000 units
Direct factory labor $13.20 per unit (VC)
Raw materials
Salesperson's Commissions $50 per unit (VC)
10% of Manufactures Selling Price (VC)
All factory and administrative overheads $2,000,000 (FC)
Retail selling price $300 per unit
Retailers margin 20%
Jobber's margin 20%
Wholesaler's margin 15%
Sales travel expenses $800,000 (FC)
Advertising $3 million (FC)
Distribution channel is Manufacturer  Wholesaler  Jobber  Retailer
Note:
In order for you have the correct answers for the following six questions you must determine the selling price for the manufacturer, The selling price for the manufacturer is $163.20. Please show all calculations that end up with the selling price based on the information above.
Questions
1. What is the contribution per unit for the Zig brand? Answer ____________________
2. What is the break even volume in units and in dollars? Answer ___________________
3. What market share does the Zig brand need to break even? Answer _______________
4. What is the current total contribution? Answer ________________________________
5. What is the current before tax profit of the Zig brand'? ___________________________
6. What market share must Zig obtain to contribute a before tax profit of $100 million?
Answer ___________________________
See Notes Below
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Solution Summary
The solution explains various questions relating to CVP analysis for Zig Microwaves
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Financial Analysis Exercise
As the Marketing Manager for the Zig brand of microwave ovens in a large consumer products company you must answer the questions found below with the following financial information regarding your product.
Total market for Microwave Ovens 5 million units
Current yearly sales of Zig brand 750,000 units
Direct factory labor $13.20 per unit (VC)
Raw materials
Salesperson's Commissions $50 per unit (VC)
10% of Manufactures Selling Price (VC)
All factory and administrative overheads $2,000,000 (FC)
Retail selling price $300 per unit
Retailers margin 20%
Jobber's margin 20%
Wholesaler's margin 15%
Sales travel expenses $800,000 (FC)
Advertising $3 million (FC)
Distribution channel is ...
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