MM-8 - 1. A consumer purchases a flat iron to straighten...

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Concepts of Marketing Name: JOMC 475 MM-8 Marketing by the Numbers – Chapter 10 One external factor manufacturers must consider when setting prices is reseller margins. Manufacturers do not have the final say concerning the price to consumers—retailers do. So, manufacturers must start with their suggested retail prices and work back, subtracting out the markups required by resellers that sell the product to consumers. Once that is considered, manufacturers know at what price to sell their products to resellers, and they can determine what volume they must sell to breakeven at that price and cost combination. To answer the following questions, refer to Appendix 3, Marketing by the Numbers.
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Unformatted text preview: 1. A consumer purchases a flat iron to straighten her hair for $150 from a salon at which she gets her hair cut. If the salons markup is 40 percent and the wholesalers markup is 15 percent, both based on their selling prices, for what price does the manufacturer sell the product to the wholesaler? 2. If the unit variable costs for each flat iron are $40 and the manufacturer has fixed costs totaling $200,000, how many flat irons must this manufacturer sell to break even? How many must it sell to realize a profit of $800,000? Fixed cost Breakeven volume = Price Variable Cost...
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This note was uploaded on 01/18/2012 for the course JOMC 475 taught by Professor Heidihennink-kaminski during the Spring '11 term at UNC.

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