Hey thanks for helping me in advance, I really appreciate what people like you do, so here is the problem.
GIVEN
Financial Background for Grease Monkey Wipes
A. Assume the per unit retail price described in the video ($1/unit)
B. Assume the retail margin for this product is 30%
C. Rent for the head office facility is $3,000 per month
D. To setup its office it will need to spend $150,000 on equipment and office furniture.
E. Assume it will sell 500,000 units in the first year, 850,000 in the second year and 1,300,000 in the third year
F. Assume the cost to have a contract manufacturer make the wipes, including packaging, is 15 cents per unit.
G. The average cost to ship a box of 24 wipes is $3.50
H. There are 3 full-time employees who earn an average salary, including benefits, of $55,000/year
I. In the first year, Grease Monkey Wipes decides to run a promotion in the Canadian market to stimulate sales. It is a buy 2 get 1 free marketing campaign in which it will give away a free wipe to the first 50,000 customers who purchase 2 wipes. To run this campaign, it will have to print coupons on which customers fill in their name, address, telephone number, email address, as well as the number of wipes purchased. Dealers will be reimbursed for authenticated coupon redemptions in the form of free products. It will cost $5000 to print the coupons and mail them to dealers. Assume all coupons are redeemed.
Assume the retail price, shipping costs and rental costs increase by 5% per year, and all personnel costs :?: (what does this mean) increase by 3% per year. Determine the following metrics:
a. Wholesale revenue per unit for years 1, 2, 3
b. Fixed expenses for years 1, 2, 3
c. Variable expenses for years 1, 2, 3
d. Profit/Loss for years 1, 2, 3
e. Total Contribution margin for years 1, 2, 3
f. Contribution margin/unit for years 1, 2, 3
g. Break-even in units for years 1, 2, 3
h. Break-even in dollars for years 1, 2, 3.
i. Payback for the initial investment.
This is... what I have completed so far but I think is wrong because the break even turns out to be 1.19 which I think is wrong and should be a bigger number. Can you let me know where i took a bad turn and maybe suggest possible solutions. the blank spaces is items i have not yet figured out.
Grease Monkey Financials
Please calculate and/or enter the appropriate value for the cells highlighted in yellow
Year 1 Year 2 Year 3
Retail Selling Price/Unit $1.00 $1.05 $1.10
Retail Margin % 30% 30% 30%
Wholesale Revenue (Price)/Unit $0.70 $0.74 $0.77
Unit Cost to Manufacture (COGS) $0.15 $0.15 $0.15
Shipping Cost/Unit $0.146 $0.153 $0.161
Total Variable Expenses (Cost)/Unit $0.596 $0.613 $0.641
Contribution Margin/Unit $0.400 $0.437 $0.459
Projected Sales Volume (# units) 500,000 850,000 1,300,000
Total Wholesale Revenues $500,000 $892,500 $1,430,000 *
Total Variable Expenses (Costs) $297,917 $472,906 $674,016 *
Total (Gross) Contribution Margin $202,083 $419,594 $755,984 *
Fixed Expenses:
Head Office Expenses $36,000 $37,800 $39,690 w/ 5%/year
Salary Expenses $165,000 $169,950 $175,049 w/ 3%/year (?personnel cost?)
Marketing Campaign Expenses (see below) $19,792
Total Fixed Expenses $220,792 *
Profit (Loss) *
Initial "Capital Investment"
Payback Calculation:
Cumulative Profit (Loss)
# of Year(s) to achieve Payback *
Break-even in Units (#) *
Break-even in Sales ($) *
Marketing Campaign Expenses (Costs) Calculation:
# of Free Wipes Given Away 50,000
Variable Expense(Cost)/Unit $0.296
Total Redemption Expenses (Costs) $14,792
Cost to Print & Mail Coupons $5,000
Total Marketing Campaign Expenses(Costs) $19,792
GIVEN
Financial Background for Grease Monkey Wipes
A. Assume the per unit retail price described in the video ($1/unit)
B. Assume the retail margin for this product is 30%
C. Rent for the head office facility is $3,000 per month
D. To setup its office it will need to spend $150,000 on equipment and office furniture.
E. Assume it will sell 500,000 units in the first year, 850,000 in the second year and 1,300,000 in the third year
F. Assume the cost to have a contract manufacturer make the wipes, including packaging, is 15 cents per unit.
G. The average cost to ship a box of 24 wipes is $3.50
H. There are 3 full-time employees who earn an average salary, including benefits, of $55,000/year
I. In the first year, Grease Monkey Wipes decides to run a promotion in the Canadian market to stimulate sales. It is a buy 2 get 1 free marketing campaign in which it will give away a free wipe to the first 50,000 customers who purchase 2 wipes. To run this campaign, it will have to print coupons on which customers fill in their name, address, telephone number, email address, as well as the number of wipes purchased. Dealers will be reimbursed for authenticated coupon redemptions in the form of free products. It will cost $5000 to print the coupons and mail them to dealers. Assume all coupons are redeemed.
Assume the retail price, shipping costs and rental costs increase by 5% per year, and all personnel costs :?: (what does this mean) increase by 3% per year. Determine the following metrics:
a. Wholesale revenue per unit for years 1, 2, 3
b. Fixed expenses for years 1, 2, 3
c. Variable expenses for years 1, 2, 3
d. Profit/Loss for years 1, 2, 3
e. Total Contribution margin for years 1, 2, 3
f. Contribution margin/unit for years 1, 2, 3
g. Break-even in units for years 1, 2, 3
h. Break-even in dollars for years 1, 2, 3.
i. Payback for the initial investment.
This is... what I have completed so far but I think is wrong because the break even turns out to be 1.19 which I think is wrong and should be a bigger number. Can you let me know where i took a bad turn and maybe suggest possible solutions. the blank spaces is items i have not yet figured out.
Grease Monkey Financials
Please calculate and/or enter the appropriate value for the cells highlighted in yellow
Year 1 Year 2 Year 3
Retail Selling Price/Unit $1.00 $1.05 $1.10
Retail Margin % 30% 30% 30%
Wholesale Revenue (Price)/Unit $0.70 $0.74 $0.77
Unit Cost to Manufacture (COGS) $0.15 $0.15 $0.15
Shipping Cost/Unit $0.146 $0.153 $0.161
Total Variable Expenses (Cost)/Unit $0.596 $0.613 $0.641
Contribution Margin/Unit $0.400 $0.437 $0.459
Projected Sales Volume (# units) 500,000 850,000 1,300,000
Total Wholesale Revenues $500,000 $892,500 $1,430,000 *
Total Variable Expenses (Costs) $297,917 $472,906 $674,016 *
Total (Gross) Contribution Margin $202,083 $419,594 $755,984 *
Fixed Expenses:
Head Office Expenses $36,000 $37,800 $39,690 w/ 5%/year
Salary Expenses $165,000 $169,950 $175,049 w/ 3%/year (?personnel cost?)
Marketing Campaign Expenses (see below) $19,792
Total Fixed Expenses $220,792 *
Profit (Loss) *
Initial "Capital Investment"
Payback Calculation:
Cumulative Profit (Loss)
# of Year(s) to achieve Payback *
Break-even in Units (#) *
Break-even in Sales ($) *
Marketing Campaign Expenses (Costs) Calculation:
# of Free Wipes Given Away 50,000
Variable Expense(Cost)/Unit $0.296
Total Redemption Expenses (Costs) $14,792
Cost to Print & Mail Coupons $5,000
Total Marketing Campaign Expenses(Costs) $19,792