In order to break-even in the first year (assuming noyear-over-year growth in units sold), what is the market share thatmust be achieved?
Please refer to situation presented in the previousquestion:
As you launch a new product, a single unit cost $22 to make; yoursuggested retail price is $98; your retailer takes 30% of theretail price; your fixed costs are $1,750,000; your sellingexpenses are $20,000; and, total unit volume sales in yourcompetitive category are 275,000. (Remember, the sales price is theretail price, less the retailer’s margin.)
A.
13.8%
B.
6.5%
C.
8.4%
Expert Answer
To achieve break even in the first year ,
The total revenue in first year =Total costs
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