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Break-Even Analysis
Fixed Cost $1,478,000
Weighted Avg. Unit Contribution $1.66
c. Break-Even Unit Volume 890,362 units
d. Break-Even Dollar Sales $ 1,178,893.24
Table 1 Computations
a. Weighted Avg. Unit Price: (sale price of aerosol*sales mix % for aerosol)+(sale price of fogger*sales mix % for fogger) =
($3.14*.66)+($2.79*.34)=3.02
b. Weighted Avg Unit Contribution: ((sale price of aerosol-COGS of aerosol)*sales mix % for aerosol)+((sale price of
fogger-COGS fogger)*sales mix % for fogger) = (($3.14-1.41)*.66)+(($2.79-1.26)*.34)=$1.66
d. Break-even sales volume: Break-even units * avg. sale price= 890,363*$3.02 = $1,178,893.24
i. Estimated Market Share: Market size*% ant/roach sales*% total roach sales in 19 city region*% test market households*
% supermarket sales*% May-october sales*% aerosol and fogger sales
= $400,000,000*.4*.5*.053*.7*.75*.74=$1,647,240
Table 3 Computations
Cost Scenario A
a. Market Size (with 10% growth rate) $ 440,000,000
% Sales for ant and roach products 40.0%
% total roach sales in 19 city market 50.0%
% Insecticides sold in supermarkets 70.0%
% Insecticides sold May-October 75.0%
% Insecticides in aerosol and fogger form 74.0%
b. Estimated Market Share $ 34,188,000.0
c. Market share required to break-even 108.13%
Break-Even Dollar Sales (from Table 3) $ 36,967,710.84
Cost Scenario B
a. Market Size (with 10% growth rate) $ 440,000,000
% Sales for ant and roach products 40.0%
% total roach sales in 19 city market 50.0%
% Insecticides sold in supermarkets 70.0%
% Insecticides sold May-October 75.0%
% Insecticides in aerosol and fogger form 74.0%
b. Estimated Market Share $ 34,188,000.0
c. Market share required to break-even 22%
Break-Even Dollar Sales (from Table 3) $7,393,542
Cost Scenario C
a. Market Size (with 10% growth rate) $ 440,000,000
% Sales for ant and roach products 40.0%
% total roach sales in 19 city market 50.0%
% Insecticides sold in supermarkets 70.0%
% Insecticides sold May-October 75.0%
% Insecticides in aerosol and fogger form 74.0%
b. Estimated Market Share $ 34,188,000.0
c. Market share required to break-even 53%
Break-Even Dollar Sales (from Table 3) $18,192,771
Computations
a.
b. Market
Market Size:
Share:Market
Marketsize * (1+growth
size*% ant/roachrate)=$400,000,000*1.10=$440,000,000
sales*% total roach sales in 19 city region*% test market households*%
supermarket sales*% May-october sales*% aerosol and fogger sales=
= $440,000,000*.4*.5*.7*.75*.74=$34,188,000
c.Break-even dollar sales: Break-even sales/estimated market share*100
A. = $36,967,710.84/$34,188,000*100=108.13%
B. =$7,393,542/$34,188,000=22%
C. $18,192,771/$34,188,000=53%
mercialization
A
Repeat Purchase
1,320,000
30%
3.5
3.02
$ 4,185,720.00
$ 9,368,040.00
$ 5,149,320.00
$20,320,000
$ (15,170,680.00)
B
Repeat Purchase
1,320,000
30%
3.5
3.02
$ 4,185,720.00
$ 9,368,040.00
$ 5,149,320.00
$4,064,000
$ 1,085,320.00
C
Repeat Purchase
1,320,000
30%
3.5
3.02
$ 4,185,720.00
$ 9,368,040.00
$ 5,149,320.00
$10,000,000
$ (4,850,680.00)
unit price
rcialization
ercialization
0
gion*% test market households*%
Table 3: Market Share Analysis for 19 City Commercialization