Cyber Novelties Cyber Novelties is a direct sells company that sells small gadgets over the Internet. The marketing research staff at Cleveland-based Cyber Novelties has developed the following annual sales estimate: Proposed Selling Sales Estimate (Units) Price $8 $10 $15 $20 $24 55,000 22,000 14,000 5,000 2,800 The demand is insensitive below $8. The new product has an annual fixed cost of $60,000 and a variable cost of $7 per unit. 1. Referring to Cyber Novelties above, calculate the elasticity between $10 and $15. 2. What is the breakeven quantity at a price of $10? 3. Referring to Cyber Novelties above, which of the proposed selling prices would generate the largest profit? 4. After conducting additional marketing research, Cyber Novelties estimates that by increasing the spending $75,000 annually for advertising and $0.05 per-unit allocation for extra promotion on the web will produce the following increases in estimated sales: 143,000 units at an $8 unit selling price, 48,000 units at $10, 18,000 units at $15, 12,000 units at $20, and 8,000 units at $24. Indicate the feasible range of prices if Cyber Novelties implements the advertising and promotional program. 5. Calculate Cyber Novelties net profits and calculate its return on investment (ROI)[1] with: (1) a $60,000 investment, and (2) with the addition of the $75,000 investment. 6. Indicate the feasible price or prices if the advertisement and promotional proposal is not implemented but management insists on at least a $25,000 target return.
Cyber Novelties Cyber Novelties is a direct sells company that sells small gadgets over the Internet. The marketing research staff at Cleveland-based Cyber Novelties has developed the following annual sales estimate: Proposed Selling Sales Estimate (Units) Price $8 $10 $15 $20 $24 55,000 22,000 14,000 5,000 2,800 The demand is insensitive below $8. The new product has an annual fixed cost of $60,000 and a variable cost of $7 per unit. 1. Referring to Cyber Novelties above, calculate the elasticity between $10 and $15. 2. What is the breakeven quantity at a price of $10? 3. Referring to Cyber Novelties above, which of the proposed selling prices would generate the largest profit? 4. After conducting additional marketing research, Cyber Novelties estimates that by increasing the spending $75,000 annually for advertising and $0.05 per-unit allocation for extra promotion on the web will produce the following increases in estimated sales: 143,000 units at an $8 unit selling price, 48,000 units at $10, 18,000 units at $15, 12,000 units at $20, and 8,000 units at $24. Indicate the feasible range of prices if Cyber Novelties implements the advertising and promotional program. 5. Calculate Cyber Novelties net profits and calculate its return on investment (ROI)[1] with: (1) a $60,000 investment, and (2) with the addition of the $75,000 investment. 6. Indicate the feasible price or prices if the advertisement and promotional proposal is not implemented but management insists on at least a $25,000 target return.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter2: Fundamental Economic Concepts
Section: Chapter Questions
Problem 2E
Related questions
Question
ONLY NEED HELP WITH 4,5,6
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning