Hor Pricing Inc. hired you as a marketing consultant. Your first assignment is to price a new product. This was chosen since the company never utilised any systematic pricing approaches and thus the pricing regimes in place might need a complete overhauling.

You are asked by

he Management to use the following information to give them examples of pricing for a sample product:

Product Y

Direct costs (per unit)- $25

Indirect costs - $1,800,000

Total number of units to be sold - 225000

Desired markup - 30%

Desired returns - 35%

Productive capital invested - $2950000

$2.950,000

Going rate price - 20% above unit costs

QUESTIONS:

a.Using the above information, to demonstrate cost-plus, and target returns pricing.

b. You are required to calculate the going rate price to two (2) decimal places.

Hot-Pricing Inc. chose to use the target returns price. The firm is now facing some

challenging times. The Manager Director Mr. Not-Sure gave you the following information:

Product X price elasticity of demand is 1.75

c. Mr Need-Profits is considering a ten (10%) percent price cut for his firm's products

since he heard that this would increase the sales. However he is unsure as to the

possible consequences, so he asks for your advice on this matter. You are required to

BRIEFLY explain to Mr Need Profits the implications of this move.

Question 2 Hot-Pricing 1ne. hired you as a marketing consultant. Your first assignment is to price an new product. This was chosen since the company never utilised any systematic pricing approaches and thus the pricing regimes in place might necd a complete overhauling. You are aaked by the Managerment to use the following information to give them examples of pricing for a a. Using the above information, to demonstrate cost-plus, and target returns pricing. b. You are required to calculate the going rate price to two (2) decimal places. Hot-Pricing Inc. chose to use the target returns price. The firm is now facing some challenging times. The Manager Director Mr. Not-Sure gave you the following information: Product X price elasticity of demand is 1.75. c. Mr Need-Profits is considering a ten (10%) percent price cut for his firm's products since he heard that this would increase the sales. However he is unsure as to the possible consequences, so he asks for your advice on this matter. You are required to BRIEFLY explain to Mr Need-Profits the implications of this move. Question 2 Hot-Pricing 1ne. hired you as a marketing consultant. Your first assignment is to price an new product. This was chosen since the company never utilised any systematic pricing approaches and thus the pricing regimes in place might necd a complete overhauling. You are aaked by the Managerment to use the following information to give them examples of pricing for a a. Using the above information, to demonstrate cost-plus, and target returns pricing. b. You are required to calculate the going rate price to two (2) decimal places. Hot-Pricing Inc. chose to use the target returns price. The firm is now facing some challenging times. The Manager Director Mr. Not-Sure gave you the following information: Product X price elasticity of demand is 1.75. c. Mr Need-Profits is considering a ten (10%) percent price cut for his firm's products since he heard that this would increase the sales. However he is unsure as to the possible consequences, so he asks for your advice on this matter. You are required to BRIEFLY explain to Mr Need-Profits the implications of this move