Video concepts Inc (VCI) investment in the project is $150,000. VCI estimates the total market for the film to be 100,000 units. other data are as follows
cost of distribution rights for film $125,000
label design $5,000
package design $10,000
advertising $ 35,000
Reproduction of copies (per 1,000) $4,000
Manufacture of labels and packaging (per 1,000) $500
Royalties (per 1,000) $500
VCI's suggested a retail price for the film is $20 per unit. the retailers margin is 40 percent
1)What is VCI's unit contribution and contribution margin?
2)What is the breakeven point in units? in dollars?
3)What share of the market would the firm have to achieve to earn a 20% retrun on VCI's investment the first year?
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