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For simplicity sake, conduct a break even analysis for the following product sold through retail distribution. Show your computations. If you can create a graph and attach it to your response, that would be great!!
The facts to be used in constructing the BEP are as follows:
– Margin paid to jewelry shop per unit under retail price of $14.00 is 30% of $14.00 or $4.20.
– Revenue per unit to the company after the margin is $14.00 – $4.20 = $9.80.
– The contribution per unit is $9.80 – $5.00 (cost of content and packaging) = $4.80.
– Total fixed costs are $30,000.
Once you have calculated the BEP, discuss the pricing point and the strategy that you will use to ensure profitability for your product. Provide rationale for both.
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