YIS Business Class February

PRODUCT DEVELOPMENT IDEA Invention Market Feedback Other

IDEA Invention Market Feedback Other 2-D Drawings Design Scope Color PRODUCT DEVELOPMENT

IDEA Invention Market Feedback Other 2-D Drawings Design Scope Color First Prototype Design Features Materials – first pass Features Evolution PRODUCT DEVELOPMENT

IDEA Invention Market Feedback Other 2-D Drawings Design Scope Color First Prototype Design Features Materials – first pass Features Evolution Final Revisions Company/Market feedback Engineering Materials Decisions Production location PRODUCT DEVELOPMENT

IDEA Invention Market Feedback Other 2-D Drawings Design Scope Color First Prototype Design Features Materials – first pass Features Evolution Final Revisions Company/Market feedback Engineering Materials Decisions Production location Final Samples Final Costs – Pricing Final Colors Sales Samples PRODUCT DEVELOPMENT

PRODUCT COSTING FINAL MANUFACTURED COST MATERIALS Bill of Materials (B.O.M) DIRECT LABOR Bill of Labor (B.O.L) OVERHEAD

PRODUCT COSTING FINAL MANUFACTURED COST (FOB)FREIGHT,INSURANCE, DUTY, CUSTOMS, MISCLANDED – DUTY PAID (LDP)COSTING BASIS – RETAIL PRICING

PRODUCT COSTING COSTING BASIS – RETAIL PRICING WHOLESALE MARGIN Results in Wholesale Price to Dealers Profit margin that goes to company RETAIL MARGIN Profit margin that goes to Retail Store MANUFACTURER’S SUGGESTED RETAIL PRICE MSRP

PRICING HEIRARCHY MSRP – Retail PriceWHOLESALE PRICECOSTING BASIS Wholesale Margin – 40% Retailer Margin – 50%

Product AProduct B COST LDP 4,000 7,000 Wholesale Margin Target - 40% Wholesale Price 6,667 11,667 Retail Margin Target - 50% MSRP 13,333 23,333 Units Wholesale 100 Retail 100 Product A Product B Product A Product B Profit and Loss Sales - Revenue 666,667 1,166,667 1,333,333 2,333,333 60%COGS 400, , ,000 1,400,000 Gross Profit/Margin 266, , , ,333 SG&A Expenses-W SG&A exp- R Pre-Tax Profit 266, , , ,333 actual % Pre-tax 20% Goal 133, , , ,667