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

Selling price (S) 450 $ Manufacturing cost 250 $ Demand 50000 to 75000 R&D cost 1000000 Sales & marketing cost 600000 other fixe cost 200000 Total Fixed cost= R&D cost + sales & marketing cost + other fixed cost Total Fixed cost= 1800000 $ a) Break even = (Selling price x total no. of pieces sold) - ( (Manufacturing cost x total no. of pieces sold) + (Total fixed cost) let number of pieces manufactured is 'X' and sam number is sold 0= (450X)-(250X+1800000) 200X=1800000 X=9000 pieces breakeven is 9000 pieces b) Contribution per piece selling price- variable cost price 450-250 200$ 200/450 44.44% c) 250/450 55.55%

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