
2 pricing questions
Bob is preparing a new product for analysis for a product he has named seabass. he has decided seabass should sell at $129.95 retail, based on his market research. Retailers customarily expect a 40% markup and wholesalers a 20% markup (both expressed as a percentage of their selling price). Seabass's variable costs are $40.38 per unit estimated total added fixed costs are $100,000. At an anticipated sales volume of 5,000 units, will bob;s seabass make a profit?
The sun hat company carries several product lines and wants to streamline their operation. they want to drop any nonperforming products. the marketing manager is looking at two products and wants to determine which one is more profitable.
Product A is a baseball hat. 2000 hats were sold last year at a price of $8. The variable costs were $4.50
Product B is a sun visor. 6000 visors were sold at $4 each with variable costs of $2.
Total overhead was $13,000 of which $6,500 was allocated to the hat and 46,500 was allocated to visor.
Which product was more profitable?

Re: 2 pricing questions