| Marketing Arithmetic Exercise Calculations |
| Initial Data: |
| Margin Structure Factors: | Retail Price: | $ 1.00 | | Market Factors: | Total Units in Market: | 20,000,000 |
| | Retail Margin/Unit: | 33% | | | Brand X Market Share: | 24% |
| | Wholesale Margin/Unit: | 12% |
| Variable Cost Factors: | Variable Mfg. Cost/Unit: | $ 0.09 | | Fixed Cost Factors: | Fixed Mfg. Costs: | $ 900,000 |
| | Shipping, etc./Unit: | $ 0.02 | | | Advertising Budget: | $ 500,000 |
| | Commissions: | 10% | | | Prod. Mgr. Salary: | $ 35,000 |
| Question 1: What is the unit contribution for Brand X? |
| Key Formulas: |
| Wholesale Selling Price = Retail Price x (100% - Retail Margin/Unit) |
| Manufacturer's Selling Price = Wholesale Selling Price x (100% - Wholesale Margin/Unit) |
| Commissions/Unit = Commission x Manufacturer's Selling Price |
| Contribution per Unit = Manufacturer's Selling Price - Variable Costs/Unit |
| Step 1: Determine Manufacturer's Selling Price |
| | Wholesale Selling Price: |
| | Manufacturer's Selling Price: |
| Step 2: Determine Total Variable Costs |
| | Variable Mfg. Cost/Unit: |
| | Shipping, etc./Unit: |
| | Commission/Unit: |
| | Total Variable Costs per unit: |
| Step 3: Determine Unit Contribution |
| | Unit Contribution: |
| Question 2: What is Brand X's break-even point? |
| Key Formula: Breakeven Units = Fixed Costs divided by Unit Contribution |
| | Fixed Costs: |
| | Breakeven Units: |
| Question 3: What market share does Brand X need to break even? |
| Key Formula: Breakeven market share = Breakeven Units divided by Total Units in Market |
| | Breakeven Market Share: |
| Question 4: What is Brand X's profit impact? |
| Key Formulas: |
| Unit Volume = Total Units in Market x Market Share |
| Profit Impact = (Unit Volume x Unit Contribution) - Fixed Costs |
| | Unit Volume: |
| | Profit Impact: |
antoinette.rbawaaara
_marketing_arithmetic_calculations-2.xls
