Executives of Monaffiche, a firm producing high-quality reproductions of artworks, produced their latest vintage-era art poster by famous artist Henri Wales, titled Mood Bloo. The following costs pertain to the new poster art:
Poster (materials & labor): $9.15/poster
Artist’s royalties: $0.85/poster
Framing (materials & labor) $11.00/poster
Advertising and promotion $175,000
Monaffiche’s overhead $650,000
Selling price to distributors $40.00
Calculate the following:
1. Calculate the contribution per poster
2. Calculate break-even volume in poster units AND dollars.
3. Calculate net profit if 100,000 posters are sold
Additional question. Monaffiche’s informal research efforts estimate the market for this particular poster to be about 50,000 units. Will this poster be profitable? Will it return their minimum $500,000 required profit?