1. As the product manager for Whirlpool's line of washing machines you are in charge of pricing new products. Your product team has developed a revolutionary new washing machine that technology will likely be difficult for your competition to copy. Should clothes clean. This a penetration pricing strategy? Justify your answer. 2. On your weekly grocery shopping trip, you notice that the price of spaghetti has gone up $3.50 a pound. In terms of the price elasticity of demand, how will this price increase alfect demand for: a. Spaghetti sauce b. Potatoes c. Parmesan cheese 3. If you worked for a manufacturing firm located in Califomia and shipped merchandise all over the United States, which would be more advantageous, a zone or a uniform delivered pricing policy? Why? What if your firm were located in Kansas - would it make a difference? 4. Woodman's purchases a can of soup for 83 cents and sells it for $1.79. a. Calculate the markup PERCENT based on cest. b. Calculate the markup PERCENT based on selling price. 5. A phone manufacturer is determining a price for its product using a cost-based pricing strategy. Fixed costs are $100,000 and variable costs are $30,000. If 1,000 units are produced and the company wants to have a 30 percent markup, what is the price of the phone? 5. A phone manufacturer is determining a price for its product using a costabased pricing strategy. Ficed costs are $100,000 and variable costs are $30,000. If 1,000 units are produced and the company wants to have a 30 percent markup, what is the price of the phone? 6. Assume you have decided to buy an advertisement in the local newspaper to advertise your pet grooming service. The cost of the ad is 5900 . You plan to charge $30 for each dog groomed, and after costs for labor, shampoo (etc) you estimate you will make 518 per dog. a. How many dogs do you have to groom to break even on the cost of the ad? b. Using the information provided above, what would your sales revenue be if you washed enough dogs to breakeven? c. What is your break-even point if you charge 535 per dog? d. If you charge $35 per dog and groom 540 dogs in a year, what would bo your profit or loss be if your only fixed cost is the advertising mentioned above? 7. Zine Energy Resources Co., a new division of a major battery manulacturing compamy, recently patented a new battery that uses zinc-air technolody. The unit costs for the zinc-air battery are: The battery housing is $5, materials are $9, and direct labor is $10 per unit Retooling the existing factory facilities to manufacture the zinc-air batteries armourits to an additional 52 million in equipment costs. Arnual fixed costs include sales, marketing, and advertising expenses of $800,000; general and administrative expenses of $700,000; and other fixed costs totaling $1 million. Please answer the following questions. a. What is the total per-unit variable cost associated with the new battery? b. What are the total fixed costs for the new battery? c. If the price for the new battery is set at 585 , what would the break-even point be? d. If the goal for the new battery, is to earn a profit of $100,000 on this product alone, how many units need to be sold
