A manufacturer wishes to evaluate the profitability of the potential new product introduction it is considering....

A manufacturer wishes to evaluate the profitability of the potential new product introduction it is considering. The planned retail selling price of the new product Brand X is $20. In this particular market, retailers expected a 30% markup/margin on their cost (there is no wholesaler). Brand X’s variable costs are $10.50 per unit, and the total fixed costs are estimated to be $80,000. The forecasted volume at the $20 retail price is 17,000 units.

A) Will this product make a profit with this planned selling price? If YES, how much? If NO, how much of a loss would there be?

B) In year 2, Jenny plans to invest in a new salesperson who’s paid solely on commission, i.e. for each unit sold, the salesperson gets 10% of the retail price. If she expects a 30% increase in units sold, what will the ROMI be for the additional salesperson?

Expert Solution

jeff jeffy answered 2 years ago

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