pricing homework

pricing homework - MKTG 2201 INTRODUCTION TO MARKETING...

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MKTG 2201- INTRODUCTION TO MARKETING Pricing Problem Assignment Qi Sun
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1. a. Contribution per unit = price – variable cost = $12 – $6 = $6 b. The breakeven revenue is $60,000. The breakeven quantity is 5,000 units. c. Sales = $12 × 10,000 = $120,000 Total Cost = Variable Cost + Fixed Cost = $6 × 10,000 + $30,000 = $90,000 Profit = Sales – Total Cost = $30,000 Markup on sales price = Profit / Sales = $30,000 / $120,000 = 25% Markup on total cost = Profit / Total cost = $30,000 / $90,000 = 33.33% d. e. Sales = $15 × 8,000 = $120,000 Total Cost = Variable Cost + Fixed Cost = $6 × 8,000 + $30,000 = $78,000 Profit = Sales – Total Cost = $42,000 Markup on sales price = Profit / Sales = $42,000 / $120,000 = 35% Markup on total cost = Profit / Total cost = $42,000 / $78,000 = 53.85% f. Original Profit = $30,000 Original Profit per unit = $30,000 / 10,000 = $3 New Profit = $42,000 New Profit per unit = $42,000 / 8,000 = $5.25 It is better off for the company to raise the price, since their profit per unit sold has increased. 2. a. Price = CM + VC = $10 Sales = Price × Quantity = $10 × 10,000 = $100,000 Total Cost = VC + FC = $6 × 10,000 + $10,000 = $70,000 Profit = Sales Total Cost = $30,000 Markup on sales price = Profit / Sales = $30,000 / $100,000 = 30% Markup on total cost = Profit / Total cost = $30,000 / $70,000 = 42.86% b. Price is dropped by $2.
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So, the new quantity is 14,000 units. c. New Price = $10 $2 = $8 New Sales = New Price × New Quantity = $8 × 14,000 = $112,000 New Total Cost = VC + FC = $6 × 14,000 + $10,000 = $94,000 New Profit = New Sales New Total Cost = $13,000 New Markup on sales price = Profit / Sales = $13,000 / $112,000 = 11.61% New Markup on total cost = Profit / Total cost = $13,000 / $94,000 = 13.83%
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This note was uploaded on 01/14/2012 for the course MKTG 2201 taught by Professor Jm during the Fall '10 term at Northeastern.

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pricing homework - MKTG 2201 INTRODUCTION TO MARKETING...

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