XYZ Company is the maker of Ninja Swords. The company manufactures the swords an
ID: 2508560 • Letter: X
Question
XYZ Company is the maker of Ninja Swords. The company manufactures the swords and then sells them to a wholesaler. The wholesaler is looking for a 20% return (mark- up) before selling them to the retailer. The retailer would like to see a 30% return (mark- up) when selling it to the customer. Below is a detailed cost structure for XYZ Company. 7. XYZ Selling Price Materials/labour Packaging Total overhead Advertising and Promotion Total Market Projected arket Share $95/unit $25/unit $10/uit $200,000 $250,000 200,000 5% a. What is the size of XYZ's market-share? b. What is the break-even point for XYZ company? c. If the company sells at the quantity set by the market-share, what is its profit? d. What are the prices at the wholesale and retail level? e. XYZ is thinking of getting into the Nunchuck business. It plans to use the same price as the sword. Using the following information, what is the net profit for each the Ninja Sword, Nunchuck, and the company as a whole: Ninja Sword Nunchuck Price Materials/labour Packaging Total overhead Advertising and Promotion Total Market Projected Market Share $95/unt $27/unit $8/unit $100,000 $100,000 200,000 $250,000 $95/unit $25/unit $10/unit 200,000 3% 4% Should the company pursue the nunchuck strategy? What other information would you consider when making this decision? f.Explanation / Answer
Working:
a XYZ's market share (5% of 200,000) 10000 units b Break even point 7500 units c Profit for the company $150,000 d Price at wholesaler's level $114 Price at retailer's level $148 e Profit for the company $190,000 f The company should pursue nunchuk strategy.Related Questions
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