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= MSRP*(1-Volume Discount)	$3.70	$3.24
Contribution per Unit=MSP-Unit Cost	$2.52	$2.50
Contribution Margin=Contribution/MSP	68.13%	77.19%

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?

Retail Price= MSP/(1-Target Profit)

Brand X Retail Price

Brand Y Retail Price

$4.94 $4.32

Many small retailers will buy through a wholesaler instead of buying direct from the manufacturer.

1. 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%? WSP@ 15%= MSP/(1-Target Profit)= $4.36

2. If the retailer has a desired margin of 30%, what would the retail price be? WSP/(1-Target Profit)= $6.22

3. What volume discount would the manufacturer have to offer for the retailer to price at MSRP?