Financial Exercises
By: Maryrabia • Coursework • 1,791 Words • April 3, 2015 • 757 Views
Financial Exercises
Benmessaoud Maryem
Mb0513
Financial Exercises
MKTG 5150-007
Marketing Management
Spring 2015
Attached is the solution to the financial exercises (problems 1-9) From the KP text on pages 50-54.
Problem 1:
| Total Variable cost per CD = $1.25 + $0.35 + $1 = $2.6 Contribution per CD unit = Selling price per CD – Variable Cost per CD = $9 - $2.6 = $6.4 |
Break-even volume in CD dollars is $ 738,281.25 | Total fixed costs = $275.000 + $ 250.000 = $525.000 Break-even volume in CD units = $525.000/$6.4 = 82,031.25 CD. Break-even volume in CD dollars: $82.031,25 x $9 = $ 738,281.25 |
| = Total sales - Total Variables costs – Total Fixed Costs = (1.000.000*$9) – (1.000.000*$2.6) – $525.000 = $5,875,000 |
| = $525.000 + $200.000 / $6.4 = 113,281.25 CD |
Problem 2:
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Let’s calculate total variable costs per unit: VCI’s unit contribution = $20- $13 = $7 VCI’s contribution margin: $20- $13 / $20 = $0.35 | ||||||||||||||||||
* Break-even point in units is 25,000 units *Break-even point in dollars is $500,000. | * Break-even point in units: Total fixed costs = $125,000 + $5,000 + $10,000 + $35,000 = $175,000 Break-even point in units = Fixed costs / Unit contribution = 175,000/$7 = 25,000 units * Break-even point in dollars: = $175,000/$0.35 = $500,000 OR, $25,000*$20 = $500,000 | ||||||||||||||||||
The share of the market that the film would have to achieve to earn a 20% return on VCI/s investment the first year is 29.29%. | *The 20% investment the first year should bring $30,000 profit: $150,000*20% = $30,000 *To earn the targeted profit the company needs to sell $175,000+30,000/$7 = $29,285.71 *Market share would be Expected sales/ Total market * 100 = $29,286/100,000 * 100= 29.29% |