Numerical Exercises
Exercise 1
The company “Health&Beauty” produces and sells several FMCG among them a
toothpaste. The final sales price to the consumer of the “Coolgate” toothpaste is of 1,50€
per unit. The retailers have a 33% margin over the sales price and the wholesalers have a
12% margin over their selling price to retailers.
• The “Coolgate” is sold by “Health&Beauty” exclusively to wholesalers that,
then, distribute it to the retailers
• The Portuguese market for toothpaste in 2014 was of 20 million units and the
“Coolgate” had 24% market share.
• “Health&Beauty has 1,35 million euros of annual fix costs regarding production
and 0,135€/unit of variable costs (which are stable for the next years)
• The advertising costs with “Coolgate” usually reach 750 thousand euros and
there are 50.000€ of other commercial expenses.
• The sales staff earns their salaries based on a 10% commission over their sales
• The transportation costs account for 3 cents of an euro per unit.
a) What is the gross margin of the “Coolgate”
b) Determine the break-even point in units for this product. Convert it to a
market share of the Portuguese toothpaste market in 2014
c) The toothpaste market is expected to grow 10% in 2015 and the
“Health&Beauty” is considering a increase of the advertising budget to a
total of 1,5 million euros in 2015. (Assume everything else remains stable)
a. What is the amount of toothpaste need to be sold in 2015 in order to
assure the break-even?
b. How many units should “Coolgate” sell to maintain the same profit level
as in the previous year? What is the market share it should achieve?
c. What would be the market share that would secure 1.500.000€ in profits?
