Cost-Plus Pricing Strategy

Product Details:

• Product A:
  • Variable Costs: $60,000
  • Fixed Costs: $40,000
  • Desired Profit Margin: 30%

• Product B:
  • Variable Costs: $80,000
  • Fixed Costs: $50,000
  • Desired Profit Margin: 25%

Requirements:

• Calculate the cost-plus price per unit for Product A and Product B.
• Determine the total price for each product based on the desired profit margin.
• Present the calculations in a detailed table format.
• Discuss how the cost-plus pricing strategy can affect market competitiveness.
• Analyze the sensitivity of the pricing strategy to changes in cost structure.
• Evaluate the long-term strategic benefits of cost-plus pricing for the company.