Case Study: Strategic pricing of new product

ABC Limited manufactures high quality copper pots and pans. Company's management accountant is involved in setting price for the company's new Starter Set. This set consist of seven of the most commonly used pots and pan. During the next year, the company plans to manufacturer 10,000 Starter Sets.

The management accountant gathered the following information regarding the cost of developing 10,000 Starter Set.

Variable Costs:

Manufacturing

$75,000

Sales Commission

$15,000

Total Variable Cost

$90,000

Fixed Cost Allocated

Manufacturing

$25,000

Total Fixed Cost

$25,000

Total Cost

$115,000

an essay explaining to the management of ABC Limited, the impact of pricing strategies on business profitability and success.