What market share does Model PEB9159SFSS need for GE to breakeven ? Jimaine Grainger, works for GE Appliances as a Product Manager for Home and KitchenAppliances and draws an annual salary of $100,000. He has primary responsibility for the GEline of Built-in Microwave Ovens, specifically Model PEB9159SFSS. GE sells the model exclusivelythrough Best Buy, Inc with a manufacturer margin of 60%. Best Buy, Inc. sells the model toconsumers in the US at a retail margin on the product is 45%. According to a recent reportreleased by the Gartner Group, the total US market for built-in microwave ovens is estimated tobe 225,000 units. Jimaine estimates that Model PEB9159SFSS has 6% of this market.Variable costs of manufacturing Model PEB9159SFSS are $142 while the company has invested$525,000 in machinery to manufacture this model. The GE Appliances salesforce is paid acommission of $40 per unit sold. GE Appliances typically employs the services of Regis Transportto ship all the microwave ovens to Best Buy. Regis Transport charges a flat rate of $48 permicrowave that is shipped.GE Appliances has allocated $950,000 toward advertising and promotional expenses for thismicrowave oven.

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What market share does Model PEB9159SFSS need for GE to breakeven ?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 14E

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