Bronco is a newly established company since 20118. It produces premium ice cream in a variety of
flavors. Over the past months, and due to the company's efforts to lower its prices to get more
customers, without compromising the quality of its products, the company has displayed rapid growth
as reflected from the demand of its products, which may allow management to reasonably consider the
change of its selling prices, without ignoring the impact of competition of course. In addition, and to
increase sales during the World Cup event in Qatar, Bronco i is planning to increase manufacturing
capacity by opening production facilities in new geographic areas including the Pearl, Lusail, Al Wakra, AI
Khor, across the maiority of the shopping malls, in addition to the 6 main stadiums that are hosting the
matches. These initiatives have put pressure on management to better understand both their potential
markets and associated costs. Management identified three aspects of their current operation that
could affect the new market expansion decision: (1) a highly competitive ice cream market, (2) the
company's current marketing strategy, and (3) the company's current cost structure.
Since the company began operations in 2018, it has used the cost-plus approach for establishing prices
for one box of ice cream. The product prices include the cost of materials and labour, a markup for profit
and overhead cost together, and a market adjustment. As per Al Broncos policy, an amount of QR 74 is
set for each product to represent the mark up that shall cover both, the profit and overhead cost. The
market adjustment is used to appropriately position a variety of products in the market. The goal is to
price the products in the middle of comparable ice creams offered by competitors while maintaining
high quality and high differentiation. Sales volume and prices as well as direct costs for the current year
are presented below by product covering the period from January 1st, 2022 up-to-date.
Product Material & Labor
Markup Market Adjustment
Unit Price
Boxes Sold
Vanilla QR 106 QR 74 QR5 QR 185 10 200
Choco QR 101 QR 74 QR25 QR 200 12 500
Caramel
QR95 QR74 QR7 QR 176 12 900
Lemon QR 98 QR74 QR7 QR 179 13 600
The company's manufacturing overhead costs were QR 2 371 120 (75% variable & 25% fixed).
Q1- In regards to the supply and demand of Broncos products, discuss the three major factors
affecting the pricing decisions, and how would Bronco set its short and long-run pricing
decisions. You are also required to outline and differentiate between the two alternative
approaches for setting Broncos prices. In your answer, show the formula that represents
each method. Furthermore, and given Bronco's business environment, which approach
is relevant for setting its prices compared to other levels of competition in other market sectors
fronco is a newly establinhed compary since 20118 . It produces premium ice coam in a variety of flayors. Over the part months, and due to the company's etfors to lower iss prices to eed more cuntomers, without compromising the quality of is peoducts, the company has deplayed rapid growth change of its seling pricet, whithout legaring the impuct of conpetition of courne, in asdeicn, and to incresse sales during the World Cup event in Gatar, fronce in planning to increme manulacturing capacity by opening producticn faclities in new geogr aphic areas including the Frart, Lusal, M Walera, A phor, across the makity of the whopping math, in addition to the 6 main staduma that are hoving the matches. These initiatives have put perssure on management to terter andersand both their poternial markets and associated corta. Manaeement identided three aspects of their current opet ation that could atfect the new murket eepanion decinion: (t) a highly competive ice eneam market, 22 ) the company's current marketing tetatesy, and [] the compary't comprest cous structure. Sirce the company began operitions in 2018 , it hai uned the cant plun appenach for nitatulithing pricen for cne bex of ice cieam. The product prices include the cust of materiats and laboyt, a makiap for prafit market adjustmemt is ised to appropriately potition a variecy of products in the markit. The goal it bo price the products in the midde of compur ible ice cteams offeved ty conpetitons atile maintaining high guality and high differentiation. 5 ales velume and priket as wel at direct cont for the carrem yew are presenced below by product cosering the period from Larnary 1st, 2022 se to daet. In regauds to the supply and demand of Broncos prodacts, discuss the thise major factors affecting the pricing decisious, and how would Bronco set its shott and long ram pricing decivions, You ase alvo sequed to outline and differentiate between the two alterautive approsches for setting Bacticos prices. In vootr aaswer, show the formala that sepresest each methot. Ftathemsote, and given Beonce's business earitonment, which apptoach is relevant foc setting its paices cocnpased to other levels of competition in other makhet Mectols. Case Study: Al Ennabi, Ince is a newly established company in Doha since 2019. It produces premium ice cream in a variety of flavours. Over the past months, and due to the company's endeavours to initially lower its prices to attract more customers, yet without compromising the quality of its products, the company has experienced rapid and continuous growth as reflected from the sustained demand of its products, which may allow management to reasonably consider the change of its selling prices, without ignoring the impact of competition of course. In addition, and in an effort to increase sales during the World Cup event in Qatar, Al Ennabi is planning to increase manufacturing capacity by opening production facilitics in new geographic areas including the Pearl, Lusail, Al Wakra, Al Khor, across the majority of the shopping malls, in addition to the 6 main stadiums that are hosting the matches. These initiatives have put pressure on management to better understand both their potential markets and associated costs. Management identified three aspects of their current operation that could affect the new market expansion decision: (1) a highly competitive ice cream market, (2) the company's current marketing strategy, and (3) the company's curtent cost structute. Since the company began operations in 2019, it has used the cost-plus approach for establishing prices for one box of ice cream. The product prices include the cost of materials and labour, a markup for profit and overhead cost together, and a market adjustment. As per Al Ennabi's policy, an amount of QR 74 is set for each product to represent the mark up that shall cover both, the profit and overhead cost. The market adjustment is used to appropriately position a variety of products in the market. The goal is to price the products in the middle of comparable ice creams offered by competitors while company's current marketing strategy, and (3) the company's current cost structure. Since the company began operations in 2019, it has used the cost-plus approach for establishing prices for one box of ice cream. The product prices include the cost of materials and labour, a markup for profit and overhead cost together, and a market adjustment. As per Al Ennabi's policy, an amount of QR74 is set for each product to represent the mark up that shall cover both, the profit and overhead cost. The market adjustment is used to appropriately position a variety of products in the market. The goal is to price the products in the middle of comparable ice creams offered by competitors while maintaining high quality and high differentiation. Sales volume and prices as well as direct costs for the current year are presented below by product covering the period from January 1s., 2022 up-to-date. Al Ennabi is considering replacing cost-plus pricing with target costing and has prepared the table below to better compare the methods. Al Ennabi tries to appeal to the top 30% of the retail sales customers, including restaurants and cafes. In positioning Al Ennabi's products, three dimensions are considered: price, quality, and product differentiation. Accordingly, there are three main competitors in the market as follows: - Comperitor A - Low cost, low quality, high standardization - Competitor B - Average cost, moderate quality, average differentiation Competitor C - High cost, high quality, high differentiation Al Ennabi has also been revicwing its purchasing, manufacturing, and distribution processes. Assuming that sales volume will not be affected by the new target prices, and before considering the increase of the manufacturing capacity by opening new branches, the company believes that the improvements in these processes will result into the following: % QR 5 decrease in the materials \& babour unit cost for both the vanilla and choco flavours. QR5 increase in the materials \& labour unit cost for both the caramel and lemon flavours. QR292670 reduction in the variable manufacturing overhead cost. 1. In regards to the supply and demand of Al Ennabi's products, discuss the three major factors affecting the pricing decisions, and how would Al Ennabi set its short and long-run pricing decisions. You are also required to outline and differentiate between the two alternative approaches for setting Al Ennabi's prices. In your answer, show the formula that represents each method. Furthermore, and given Al Ennabi's business environment, which approach is relevant for setting its prices compared to other levels of competition in other market sectors. Case Study: Al Ennabi, Inc. is a newly established company in Doha since 2019 . It produces premium ice cream in a varicty of flavours. Over the past months, and due to the company's endeavours to initially lower its prices to attract more customers, yet without compromising the quality of its products, the company has experienced rapid and continuous growth as reflected from the sustained demand of its products, which may allow management to reasonably consider the change of its selling prices, without ignoring the impact of competition of course. In addition, and in an effort to increase sales during the World Cup event in Qatar. Al Ennabi is planning to increase manufacturing capacity by opening production facilities in new geographic areas including the Pearl, Lusail, Al Wakra, Al Khor, across the majority of the shopping malls, in addition to the 6 main stadiums that are hosting the matches. These initiatives have put pressure on management to better understand both their potential markets and associated costs. Management identified three aspects of their current operation that could affect the new market expansion decision: (1) a highly competitive ice cream market, (2) the company's current marketing strategy, and (3) the company's current cost structure. Since the company began operations in 2019, it has used the cost-plus approach for establishing prices for one box of ice cream. The product prices include the cost of materials and labour, a markup for profit and overhead cost together, and a market adjustment. As per Al Ennabi's policy, an amount of QR 74 is set for each product to represent the mark up that shall cover both, the profit and overhead cost. The market adjustment is used to appropriately position a variety of products in the market. The goal is to price the products in the middle of comparable ice creams offered by competitors while maintaining high quality and high differentiation. Sales volume and prices as well as direct costs for the current year are presented below by product covering the period from January 1st,2022 up-to-date. 120(75% variable \& 25% fixed ) Al Ennabi is considering replacing cost-plus pricing with target costing and has prepared the table below to better compare the methods. Al Ennabi tries to appeal to the top 30% of the retail sales customers, including restaurants and cafes. In positioning Al Ennabi's products, three dimensions are considered: price, quality, and product differentiation. Accordingly, there are three main competitors in the market as follows: Al Ennabi has also been reviewing its purchasing, manufacturing, and distribution processes. Assuming that sales volume will not be affected by the new target prices, and before considering the increase of the manufacturing capacity by opening new branches, the company believes that the improvements in these processes will result into the following: QR 5 decrease in the materials \& labour unit cost for both the vanilla and choco flavours. QR 5 increase in the materials \& labour unit cost for both the caramel and lemon flavours. * QR 292670 reduction in the variable manufacturing overhead cost. Required: 1. In regards to the supply and demand of Al Ennabi's products, discuss the three major factors affecting the pricing decisions, and how would Al Ennabi set its short and long-run pricing decisions. You are also required to outline and differentiate between the two alternative approaches for setting Al Ennabi's prices. In your answer, show the formula that represents each method. Furthermore, and given Al Ennabi's business environment, which approach is relevant for setting its prices compared to other levels of competition in other market sectors. fronco is a newly establinhed compary since 20118 . It produces premium ice coam in a variety of flayors. Over the part months, and due to the company's etfors to lower iss prices to eed more cuntomers, without compromising the quality of is peoducts, the company has deplayed rapid growth change of its seling pricet, whithout legaring the impuct of conpetition of courne, in asdeicn, and to incresse sales during the World Cup event in Gatar, fronce in planning to increme manulacturing capacity by opening producticn faclities in new geogr aphic areas including the Frart, Lusal, M Walera, A phor, across the makity of the whopping math, in addition to the 6 main staduma that are hoving the matches. These initiatives have put perssure on management to terter andersand both their poternial markets and associated corta. Manaeement identided three aspects of their current opet ation that could atfect the new murket eepanion decinion: (t) a highly competive ice eneam market, 22 ) the company's current marketing tetatesy, and [] the compary't comprest cous structure. Sirce the company began operitions in 2018 , it hai uned the cant plun appenach for nitatulithing pricen for cne bex of ice cieam. The product prices include the cust of materiats and laboyt, a makiap for prafit market adjustmemt is ised to appropriately potition a variecy of products in the markit. The goal it bo price the products in the midde of compur ible ice cteams offeved ty conpetitons atile maintaining high guality and high differentiation. 5 ales velume and priket as wel at direct cont for the carrem yew are presenced below by product cosering the period from Larnary 1st, 2022 se to daet. In regauds to the supply and demand of Broncos prodacts, discuss the thise major factors affecting the pricing decisious, and how would Bronco set its shott and long ram pricing decivions, You ase alvo sequed to outline and differentiate between the two alterautive approsches for setting Bacticos prices. In vootr aaswer, show the formala that sepresest each methot. Ftathemsote, and given Beonce's business earitonment, which apptoach is relevant foc setting its paices cocnpased to other levels of competition in other makhet Mectols. Case Study: Al Ennabi, Ince is a newly established company in Doha since 2019. It produces premium ice cream in a variety of flavours. Over the past months, and due to the company's endeavours to initially lower its prices to attract more customers, yet without compromising the quality of its products, the company has experienced rapid and continuous growth as reflected from the sustained demand of its products, which may allow management to reasonably consider the change of its selling prices, without ignoring the impact of competition of course. In addition, and in an effort to increase sales during the World Cup event in Qatar, Al Ennabi is planning to increase manufacturing capacity by opening production facilitics in new geographic areas including the Pearl, Lusail, Al Wakra, Al Khor, across the majority of the shopping malls, in addition to the 6 main stadiums that are hosting the matches. These initiatives have put pressure on management to better understand both their potential markets and associated costs. Management identified three aspects of their current operation that could affect the new market expansion decision: (1) a highly competitive ice cream market, (2) the company's current marketing strategy, and (3) the company's curtent cost structute. Since the company began operations in 2019, it has used the cost-plus approach for establishing prices for one box of ice cream. The product prices include the cost of materials and labour, a markup for profit and overhead cost together, and a market adjustment. As per Al Ennabi's policy, an amount of QR 74 is set for each product to represent the mark up that shall cover both, the profit and overhead cost. The market adjustment is used to appropriately position a variety of products in the market. The goal is to price the products in the middle of comparable ice creams offered by competitors while company's current marketing strategy, and (3) the company's current cost structure. Since the company began operations in 2019, it has used the cost-plus approach for establishing prices for one box of ice cream. The product prices include the cost of materials and labour, a markup for profit and overhead cost together, and a market adjustment. As per Al Ennabi's policy, an amount of QR74 is set for each product to represent the mark up that shall cover both, the profit and overhead cost. The market adjustment is used to appropriately position a variety of products in the market. The goal is to price the products in the middle of comparable ice creams offered by competitors while maintaining high quality and high differentiation. Sales volume and prices as well as direct costs for the current year are presented below by product covering the period from January 1s., 2022 up-to-date. Al Ennabi is considering replacing cost-plus pricing with target costing and has prepared the table below to better compare the methods. Al Ennabi tries to appeal to the top 30% of the retail sales customers, including restaurants and cafes. In positioning Al Ennabi's products, three dimensions are considered: price, quality, and product differentiation. Accordingly, there are three main competitors in the market as follows: - Comperitor A - Low cost, low quality, high standardization - Competitor B - Average cost, moderate quality, average differentiation Competitor C - High cost, high quality, high differentiation Al Ennabi has also been revicwing its purchasing, manufacturing, and distribution processes. Assuming that sales volume will not be affected by the new target prices, and before considering the increase of the manufacturing capacity by opening new branches, the company believes that the improvements in these processes will result into the following: % QR 5 decrease in the materials \& babour unit cost for both the vanilla and choco flavours. QR5 increase in the materials \& labour unit cost for both the caramel and lemon flavours. QR292670 reduction in the variable manufacturing overhead cost. 1. In regards to the supply and demand of Al Ennabi's products, discuss the three major factors affecting the pricing decisions, and how would Al Ennabi set its short and long-run pricing decisions. You are also required to outline and differentiate between the two alternative approaches for setting Al Ennabi's prices. In your answer, show the formula that represents each method. Furthermore, and given Al Ennabi's business environment, which approach is relevant for setting its prices compared to other levels of competition in other market sectors. Case Study: Al Ennabi, Inc. is a newly established company in Doha since 2019 . It produces premium ice cream in a varicty of flavours. Over the past months, and due to the company's endeavours to initially lower its prices to attract more customers, yet without compromising the quality of its products, the company has experienced rapid and continuous growth as reflected from the sustained demand of its products, which may allow management to reasonably consider the change of its selling prices, without ignoring the impact of competition of course. In addition, and in an effort to increase sales during the World Cup event in Qatar. Al Ennabi is planning to increase manufacturing capacity by opening production facilities in new geographic areas including the Pearl, Lusail, Al Wakra, Al Khor, across the majority of the shopping malls, in addition to the 6 main stadiums that are hosting the matches. These initiatives have put pressure on management to better understand both their potential markets and associated costs. Management identified three aspects of their current operation that could affect the new market expansion decision: (1) a highly competitive ice cream market, (2) the company's current marketing strategy, and (3) the company's current cost structure. Since the company began operations in 2019, it has used the cost-plus approach for establishing prices for one box of ice cream. The product prices include the cost of materials and labour, a markup for profit and overhead cost together, and a market adjustment. As per Al Ennabi's policy, an amount of QR 74 is set for each product to represent the mark up that shall cover both, the profit and overhead cost. The market adjustment is used to appropriately position a variety of products in the market. The goal is to price the products in the middle of comparable ice creams offered by competitors while maintaining high quality and high differentiation. Sales volume and prices as well as direct costs for the current year are presented below by product covering the period from January 1st,2022 up-to-date. 120(75% variable \& 25% fixed ) Al Ennabi is considering replacing cost-plus pricing with target costing and has prepared the table below to better compare the methods. Al Ennabi tries to appeal to the top 30% of the retail sales customers, including restaurants and cafes. In positioning Al Ennabi's products, three dimensions are considered: price, quality, and product differentiation. Accordingly, there are three main competitors in the market as follows: Al Ennabi has also been reviewing its purchasing, manufacturing, and distribution processes. Assuming that sales volume will not be affected by the new target prices, and before considering the increase of the manufacturing capacity by opening new branches, the company believes that the improvements in these processes will result into the following: QR 5 decrease in the materials \& labour unit cost for both the vanilla and choco flavours. QR 5 increase in the materials \& labour unit cost for both the caramel and lemon flavours. * QR 292670 reduction in the variable manufacturing overhead cost. Required: 1. In regards to the supply and demand of Al Ennabi's products, discuss the three major factors affecting the pricing decisions, and how would Al Ennabi set its short and long-run pricing decisions. You are also required to outline and differentiate between the two alternative approaches for setting Al Ennabi's prices. In your answer, show the formula that represents each method. Furthermore, and given Al Ennabi's business environment, which approach is relevant for setting its prices compared to other levels of competition in other market sectors
