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 non-performing 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