Excel File Edit View Insert Format Tools Data a Window Help G PLC 9 0 0 $ 93% 2. Q Wed Mar 20 2:00 AM MAA-2402E-TBS03-01.Simulation.... D' Q AutoSave . Q Page 1 of 3 Q n A F ? C .. MAA-2402E-TBS03-01.Task Home Insert Draw Page Layout Formulas >> Tell me Comments Share UNIT 3 - TASK-BASED SIMULATION #1 A V Conditional O Simulation (25 minutes) Format as Table Clipboard Font Alignment Number Cells Add-ins Cell Styles v Editing Ken Pantelis, CPA, works for Akalye Products Inc. (API), a beauty products company that manufactures, distributes, and retails high-end products including lipsticks, A1 X V fx INTERMEDIATE MANAGEMENT ACCOUNTING perfumes, facial cleansers and lotions, and body lotions. API uses a variety of pricing strategies for its products. Recently, API hired a new VP-Finance who wants to A understand the current demand-pricing strategies used by the company. He is The new VP-Finance has asked Ken to summarize the current pricing strategy used for a variety of API products and to provide a rationale. Ken will complete the table below, using information in Appendix I. considering whether the company should move to a cost-based pricing strategy instead. Instructions: erates in the very competitive beauty products market. market. Many of API's products In Column B, select the appropriate demand-based pricing strategy from the drop-down list that is currently being used for the product identified in have been on the market for years. API recently developed one new line of products, Column A. Each demand-based pricing strategy may be used once, more than once, or not at all. HIS Hair Colour, for which the development costs and all related market entry costs have been tracked. This had not been done previously for other developed products. In Column C, select the most appropriate rationale from the drop-down list to support your strategy identified in Column B. A rationale may be used once, more than once, or not at all. API has gathered a lot of research that has provided the company with a good 12 understanding of its competitors' products, costs, capabilities, and technologies. In B addition, because all its major competitors are publicly listed companies, API has Product name Demand-based Rationale access to their financial information. API has long-term contracts to supply private-label pricing strategy products with B & S Inc. and Chantelles Inc., both large beauty product retailers in 2 Chante Luxe Lipstick Canada. 3 O'Kalye Facial Products Additional information: 4 Akalye Value Pack 18 5 Les Fleurs Perfume hitermediate Management Accounting - Unit 3 - Task-Based Simulation #1 Simulation Intermediate Management Accounting - Unit 3 - Task-Based Simulation #1 6|Boogie Suntan Lotion Simu 20 Appendix 1: Email from VP-Marketing, Bernadette McNair Appendix II: Text messages with Dianna Chen, API's market analyst 7 HIS Hair Colour Subject: Pricing of existing products Column B drop-down options Loss-leader pricing TO: Ken Pantelis, CPA Dianna Peak-load pricing FROM Bernadette McNair, VP-Marketing Penetration pricing Dianna - I need some information about some Predatory pricing Good morning, products. Price bundling As per your email, I have summarized below how we have determined the prices for Price skimming the products you identified. If you have any questions, let me know. Chante Luxe Lipsticks - We have priced these lipsticks at a price below Ken Pantelis, CPA Sure, what do you need to kno our costs, and currently is 60 urrently is 60% less than competitors' prices. This has Column C drop-down options ad our market share and caused worked well for us, since this has increased our market shar Priced as a compromise between profit targets and competitors' three of our main competitors to reduce their product selection in this Dia 32 prices. category, increasing our shelf exposure in the stores. Can you give some information on the demand curve Priced higher when demand is high and lower when demand is O'Kalye Facial Products - These products are sold below competitors' for our Les Fleurs Perfume product? market prices to promote our brand to the customer. Customers purchasing 33 low. facial products always buy API makeup products as well. Ken Pantelis, CPA Priced lower when demand is high and higher when demand is Akalye Value Pack - This product is sold with several of our Akalye body 34 low. wash products made from similar ingredients, in a combined package that is Our research on the demand curve for t product shows that demaria is unlikely Priced to attract customers to other profitable products. sold in a value package at a 10% discount off the combined prices of the individual products. hange even if prices increase significant w w Priced to break even at Les Fleurs Pertun y perfume designed for sale around Priced to cover all product costs and earn a suitable margin. Valentine's high perceived value by customers. As such, DI 37 we make limited quantities and sell it at a very high premium price compared Great. That's all I need for now. Priced to drive out competitors to other perfumes. Priced to gain market share. Boogie Suntan Lotion - This product has been the number-one Ken Pantelis, CPA recommended product by dermatologists for a few years now. We price it Priced to offer customers a price reduction when they are higher in the summer and lower in the winter. buying more than one product. 2 8 HIS Hair Colour - This a new product for us in a relatively new market, so we have priced it low to attract customers and gain som mers and gain some market share. We will likely increase this price next year once we have attained sufficient CPA Canada Task 1 Task 2 Task 3 + market share. Ready Accessibility: Investigate 76%