1. Suppose Albertson's always takes a 33.3% retailer margin on pickles. You are selling a jar of sweet pickles to Albertson's for $2.00. What retail price would you expect to see on their shelf?

$2.99

$2.66

$3.33

$4.00

2. You are a marketing manager with profit responsibility for the pickle line. A salesperson comes to you and says he can double the amount of sales on sweet pickles this Thanksgiving if you offer 33% off the regular price. Your regular price per case is $24.00, and your cost is $14.00 per case. Your fixed costs on the sweet pickle line are $10,000 for this time period. Last year at Thanksgiving, you did not offer a sales price and you sold 2,000 cases. After you crunch the numbers, you learn that:

		if he can double the volume, he will actually give the firm MORE profit than last year.
		even if he doubles the volume, he will not generate enough contribution margin to cover fixed costs, and the firm will have a net LOSS that month.
		if he can double the volume, the firm will cover fixed costs, but the profit will be less than last year.
		if he can double the volume, the firm will make the same amount of profit as last year.