Parvaderm Corporation Essay

1198 Words5 Pages
1. Masters must decide whether to approve a market test of the new products to a limited cross-section of drug and food-and-drug stores. The estimated cost of the test is $30,000, along with a $10,000 supplier set-up charge. A 20,000 unit minimum order for each package size is also required. Estimated total cost of the test market is as follows: $30,000 Test Market cost + 10,000 Set-up cost + 5,800 10 oz can Production cost + 4,800 5 ½ oz can Production cost $40,600 Total test Market cost Based of Soft and Silky’s performance through 2000, results from the focus group studies and the performance of analogous products, the aerosol container concept should be produced further. 2.5 ½ Oz. Tube Pricing: 5 ½ Oz.…show more content…
Aerosol: Cannibalized Volume 1745174 × 0.43 = $ 741,699 Incremental Volume 800000 × 0.43 = $ 340,000 Total 11545174 $ 7,545,335 Less: Forecasted Volume (10745174) × 0.72 = $ (7,716,989) Total 800000 $ (171,653) Forecast D: Unit Volume Price Per oz Sales 5.5 oz Tube 9600000 × 0.72 = $ 6,894,545 10 oz. Aerosol: Cannibalized Volume 1145174 × 0.43 = $ 486,699 Incremental Volume 1500000 × 0.43 = $ 637,500 Total 12245174 $ 8,018,744 Less: Forecasted Volume (10745174) × 0.72 = $ (7,716,989) Total 1500000 $ 301,756 If the probability of the low estimate is 30%, and the probability of the high estimate is 70%, there is more risk involved if the company is to pursue the 10 oz aerosol cans. This is because the low estimate of 10 oz aerosol cans Ms-Tique is 40389 units (171653 / 4.25)

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