Question
For each brand in the following table, calculate the manufacturers selling price (MSP), the contribution per unit, and the contribution margin as a percentage of
For each brand in the following table, calculate the manufacturers selling price (MSP), the contribution per unit, and the contribution margin as a percentage of MSP. Promotional allowances are considered a variable cost.
| Brand X | Brand Y |
MSRP | $5.29 | $4.99 |
Volume Discount | 30% | 35% |
Promotion Allowance | 15% | 12% |
Unit Cost | $1.18 | $0.74 |
MSP |
|
|
Contribution per Unit |
|
|
Contribution Margin |
|
|
For large retailers, the MSP represents their product cost, which they will mark up to set the retail price. If the retailer has a target margin of 25%, what would the retail prices be for the brands in question 4?
Brand X Retail Price |
| Brand Y Retail Price |
|
- Many small retailers will buy through a wholesaler instead of buying direct from the manufactur
- Given the pricing policy for Brand X in question 4, what would be the wholesalers selling price (WSP) if the wholesaler has a desired margin of 15%?
- If the retailer has a desired margin of 30%, what would the retail price be?
- What volume discount would the manufacturer have to offer for the retailer to price at MSRP?
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