(b) Incremental Break-Even Unit Volume for Fixed Cost Actions (IBEV)
Husk Inc. is Iowa's leading manufacturer of corn-related novelties and paraphernalia. Husk has decided to break into the lucrative corn market of Nebraska gradually. They plan on introducing Colonel Kernel, the talking corn on the cob, to the Nebraskan market. After negotiating with Nebraskan retailers, Husk expects the average retail price to be around $8. The dealer margins are estimated to be 25%. The cost of manufacturing per unit is $.90 for the parts, $.50 for assembly, $.75 for finishing, and $.35 for shipping.
Phil Neely, the resident cornographer who is in charge of promoting the product, will head the Nebraska marketing campaign. Neely estimates that Husk will spend $10,000 on life-size Colonel Kernel cut-outs (to be given free to retailers for in-store display), $50,000 on TV commercials on local stations in the Omaha area, and $75,000 on a giant 'Crown of Corns' festival (featuring Dolly Parton and three time Iowa State Fair winner Herb Longman and his incredible pumpkin pie).