Anita Knapp is Product Manager for Snuggies Disposable Diapers. Her company is introducing a new line of childrens diapers which are available in designer labels such as Christian Dior and Versace. As Anita prepares for her sales presentation, she determines several different levels of pricingfirst, her price to the buyer at Gymboree, based on her cost and margin requirements. Then, her price and margin based the cash discount she knows Gymboree will ask for, and take! Finally, she seeks to determine what Gymborees margin on their resale of the product will be, based on Snuggies suggested retail price. The cost of one box of "Designer Diaper Duds" is: $4.00 Snuggies Corporate Gross Margin Requirement is: 45% (.45) With this cost and margin requirement, what price should Anita charge Gymboree for a box of Designer Diaper Duds?

Anita plans to offer Gymboree a special discount of 5% (0.05). Based on the price you have just calculated, how much will Gymboree's NET price be after the 5% discount?

Gymborees retail price for each box of Designer Diapers is $8.99. Based on the NET price they will pay for each box of Designer Duds, what will Gymboree's gross margin percent be on each box?

Now, the finance manager at Snuggies, Joe Kerr, knows that it costs $180,000 per year to lease and operate the Designer Diapers manufacturing plant. Packaging, raw materials and direct labor cost $0.75 per box of diapers. (Reference Slide 12 of your Pricing PowerPoint to assist you with question 4) Based on the data above, and using the net price of a box of Designer Diapers, how many boxes of Designer Diapers must Snuggies sell to reach their break-even point?