after spending 300000 for research and development chemists diversified citrus industries have d

1. Identify the variable costs associated with the new model.

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After spending $300,000 for research and development, chemists at Diversified Citrus Industries have developed a new breakfast drink. The drink, called Zapa, will provide the consumer with twice the amount of vitamin C currently available in breakfast drinks. Zapa will be packaged in an 8-ounce can and will be introduced to the breakfast drink market, which is estimated to be equivalent to 21 million 8-ounce cans nationally. One major management concern is the lack of funds available for marketing. Accordingly, management has decided to use newspapers (rather than television) in the introductory year to promote Zapa. They will distribute Zapa in major metropolitan areas that account for 65 percent of US breakfast drink volume. Newspaper advertising will carry a coupon that will entitle the consumer to receive $0.20 off the price of the first can purchased. The retailer will receive the regular margin and be reimbursed for redeemed coupons by Diversified Citrus Industries. Past experience indicates that for every five cans sold during the introductory year, one coupon will be returned. The cost of the newspaper advertising campaign and coupon returns will be $250,000. Other fixed overhead costs (excluding advertising) are expected to be $90,000 per year. Management has decided that the suggested retail price to the consumer for the 8-ounce can will be $0.50. The only unit variable costs for the product are $0.18 for materials and $0.06 for labor. The company margin of 20 percent off the suggested retail price tends to give retailers a wholesale margin of 10 percent of the retailer's cost of the item. At what price will Diversified Citrus Industries be selling its product to wholesalers? What is the contribution per unit for Zapa? What is the break-even unit volume in the first year? What is the first-year break-even share of the market? Video Concepts, Inc. (VCI) manufactures a line of DVD recorders (DVDs) that are distributed to large retailers. The line consists of three models of DVDs. The following data are available regarding the models: Model LX1: - Selling Price per Unit: $175 - Variable Cost per Unit: $100 - Demand: 250 units Model LX2: - Selling Price per Unit: $2000 - Variable Cost per Unit: $250 - Demand: 125 units Model LX3: - Selling Price per Unit: $1000 - Variable Cost per Unit: $300 - Demand: 100 units VCI is considering the addition of a fourth model to its line of DVDs. This model would be sold to retailers for $375. The variable cost of this unit is estimated to be $300. The demand for the Model LX4 is estimated to be 60 units in the first year.

After spending $300,000 for research and development, chemists at Diversified Citrus Industries have developed a new breakfast drink. The drink, called Zapa, will provide the consumer with twice the amount of vitamin C currently available in breakfast drinks. Zapa will be packaged in an 8-ounce can and will be introduced to the breakfast drink market, which is estimated to be equivalent to 21 million 8-ounce cans nationally. One major management concern is the lack of funds available for marketing. Accordingly, management has decided to use newspapers (rather than television) in the introductory year to promote Zapa. They will distribute Zapa in major metropolitan areas that account for 65 percent of US breakfast drink volume. Newspaper advertising will carry a coupon that will entitle the consumer to receive $0.20 off the price of the first can purchased. The retailer will receive the regular margin and be reimbursed for redeemed coupons by Diversified Citrus Industries. Past experience indicates that for every five cans sold during the introductory year, one coupon will be returned. The cost of the newspaper advertising campaign and coupon returns will be $250,000. Other fixed overhead costs (excluding advertising) are expected to be $90,000 per year. Management has decided that the suggested retail price to the consumer for the 8-ounce can will be $0.50. The only unit variable costs for the product are $0.18 for materials and $0.06 for labor. The company margin of 20 percent off the suggested retail price tends to give retailers a wholesale margin of 10 percent of the retailer's cost of the item. At what price will Diversified Citrus Industries be selling its product to wholesalers? What is the contribution per unit for Zapa? What is the break-even unit volume in the first year? What is the first-year break-even share of the market?

Video Concepts, Inc. (VCI) manufactures a line of DVD recorders (DVDs) that are distributed to large retailers. The line consists of three models of DVDs. The following data are available regarding the models:

Model LX1:
- Selling Price per Unit: $175
- Variable Cost per Unit: $100
- Demand: 250 units

Model LX2:
- Selling Price per Unit: $2000
- Variable Cost per Unit: $250
- Demand: 125 units

Model LX3:
- Selling Price per Unit: $1000
- Variable Cost per Unit: $300
- Demand: 100 units

VCI is considering the addition of a fourth model to its line of DVDs. This model would be sold to retailers for $375. The variable cost of this unit is estimated to be $300. The demand for the Model LX4 is estimated to be 60 units in the first year.

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