Show work (calculations), No excel The cost to a manufacturer of flat panel disp

Question

Show work (calculations), No excel

The cost to a manufacturer of flat panel displays for producing its newly designed TV Display 1000 is $250.00. The cost for Research and Development of their new product being sold to OEMs as a component product has been one million dollars. The sales and promotional budget is $600,000, and all other fixed costs amount to $200,000. The Marketing Director and his staff have estimated demand for the new display to be between 50,000 and 75,000 units over the next year. They also have decided to price the new Display 1000 at $450 to their OEM customers.

(a) How many Display 1000s does the manufacturer have to sell in order to breakeven?

(b) What is the manufacturer’s unit contribution to profit in percentage?

(c) What is the manufacturer’s markup on cost in percentage?

Explanation / Answer

we will state the facts n figures as follows:

1. COSTS

MANUFACTURER OF FLAT PANEL DISPLAYS : MANUFACTURING COST TO BE PAID = $ 250

2. R & D = 1 MILLION $

3. SALES & PROMOTION COST = $ 600000

4. FIXED COST = $ 200000

5. DEMAND = 50000 TO 75000 UNITS PER ANNUM

6. SELLING PRICE = $ 450 PER UNIT

TOTAL REVENUE GENERATING POTENTIAL = 50000 X 450 = 22500000 ; 75000 X 450 = $ 33750000

TOTAL REVENUE ANTICIPATED = FROM AS LOW AS 22500000 TO 33750000

TV DISPLAY 1000 FINANCE CASE MANUFACTURING COST = 250 R & D = 1000000 SALES & PROMOTION = 600000 FIXED COSTS = 200000 TOTAL FIXED COSTS 1800000 INCOME DEMAND = 50000 REVENUE = 22500000 DEMAND = 75000 REVENUE = 33750000 SELLING PRICE PER UNIT = 450 BREAKEVEN POINT = 4000

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