ExcrseChptr12Spr10-1 - 3 How many pairs of shoes would need...

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North Carolina State University College of Management BUS 360-001 Marketing Management Chapter Exercise Chapter 12: Pricing Concepts for Establishing Value Enter your name, Section and Date: Julia Claiborne, section 001, June 17, 2010 Assignment: A shoe manufacturer has opened a new manufacturing plant. The cost of the plant was an investment of $800,000. The total fixed operating cost is $80,000 per year. The variable cost for materials, labor, distribution, marketing etc is $15 per pair. The maximum manufacturing capacity of the plant is 20,000 pairs of shoes a year. 1. What is the volume of sales required for the business to break even each year? 2. Based on the volume determined in question 1 how much will the shoes need to sell for to make a 12% profit?
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Unformatted text preview: 3. How many pairs of shoes would need to be sold and at what price to recover the initial plant investment in five years? Explain your answers and how they were calculated. Number your answers and enter below Start Here 1. Contribution per unit= 80-15= 65 Break even point= $80,000/65= 1,231 sales 2. They would need to sell for $73.00 to make 12% profit. 3. (80,000+160,000.00)/65=3,693 shoes They would need to sell 3,693 shoes at $80/pair to recover the initial plant investment in 5 years. I certify that I completed this Chapter exercise without assistance from anyone and that these answers are solely my own work. Signature Julia Claiborne Date June 17, 2010 BUS 360-001 Chapter 12 Exercise –Instructor: Weems...
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