Question
As expected, the second problem of the final exam was to assess the students knowledge on pricing. Among other things, the student was asked to
As expected, the second problem of the final exam was to assess the students knowledge on pricing. Among other things, the student was asked to determine the price a product should be sold to cover the total costs of the company. To perform this task the following information was given: - The desired return on sales and on invested capital the company wants to achieve is 10%. The invested capital was equal to 80 - Total costs (140 ) are shared between 100 of fixed and 2 of variable costs the answer given by one student (more or less reasonable) is that the price at which the product should be sold is 7.4 . If this part of the problem was valued on 3 points, explain what are the calculations made by the student, whether you agree or disagree with the answer and what rating it deserves. The second part of the problem raised the possibility that sales of the company increases by 20% due to promotional activities. In this case, could you tell us what would be the markup price the product should be sold?
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