1. You bought cigars for $3 dollars each. You desire a 23% markup on the selling price.

a. What would your selling price be?

b. What is your markup as a percentage of cost?

2. Suppose your competitor is using a 34% percent markup based on cost. Your markup is 37% based on selling price.

a. What is your competitors markup as a percentage of selling price?

b. What is your markup as a percentage of cost?

c. How close are the markups between you and your competitor? Explain

3. Now you are in the business of selling deodorant. Your annual fixed costs will be 420,000. Your cost per stick is $2.30 dollars (i.e. variable cost). You wish to have a 19% margin based on selling price.

a. What should your selling price be?

b. Bonus: Now that you have calculated the selling price, assume that you can sell 6 million sticks of deodorant. What will your overall sales/revenues be? What will your overall profitability be?