What is the break-even volume in the first year

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Reference no: EM131197582

The manufacturer, Innovation Beverage, has developed a new breakfast drink, Break-C. Break-C will be packaged in an 8-oz can and introduced to the breakfast drink market, which is estimated to be 21 million 8-oz cans nationally. Break-C manufacturer selling price for an 8-oz can is $.36. The variable unit costs for the product are $.18 for materials and $.06 for labor. Additional overhead costs are expected to be $90,000. A major concern is a lack of funds for marketing. As such, Break-C will only be distributed in major metropolitan areas that account for 65% of U.S. breakfast drink market volume. Print ads will carry a coupon entitling consumers to receive $.20 off the price. Past experience indicates that for every 5 cans sold, 1 coupon will be returned. The cost of print ads (excluding coupons) is $250,000. Calculate the following (show your work): a) What is the contribution per unit for Break-C? b) What is the break-even volume in the first year? c) What is the first-year break-even market share for the market distributed in? d) What unit volume in necessary to achieve $100,000 profit?

Reference no: EM131197582

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