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Many luxury sheets cost less than $200 to make but sell for more than $500 in retail stores. Some cost even more- consumers pay
Many luxury sheets cost less than $200 to make but sell for more than $500 in retail stores. Some cost even more- consumers pay almost $3,000 for Frett'e "Tangeri Pizzo" king- size luxury linens. The creators of a new brand of luxury linens, called Boll & Branch, have entered this market and are deter- mining the price at which to sell their sheets directly to con- sumers online. They want to price their sheets lower than most brands but still want to earn an adequate margin on sales. The sheets come in a luxurious box that can be reused to store lingerie, jewelry, or other keepsakes. The Boll & Branch brand touts fair-trade practices when sourcing its high-grade long-staple organic cotton from India. Given the cost informa- tion below, refer to Appendix 2: Marketing by the Numbers to answer the following questions. 10-13 Given the cost per king-size sheet set above and assuming the manufacturer has total fixed costs of $500,000 and estimates first year sales will be 50,000 sets, determine the price to consumers if the com- pany desires a 40 percent margin on sales. (AACSB: Communication; Analytical Reasoning) 10-14 the company decides to sell through retailers in- stead of directly to consumers online, to maintain Raw cotton Spinning/weaving/dyeing Cut/sew/finishing Material transportation Factory fee $28.00 $12.00 $10.00 $3.00 $16.00 Inspection and import fees Ocean freight/insurance $14.00 $5.00 Warehousing $8.00 Packaging $15.00 $30.00 $15.00 Promotion Customer shipping the consumer price you calculated in the previous question, at what price must it sell the product to a wholesaler who then sells it to retailers? Assume wholesalers desire a 10 percent margin and retal ers get a 20 percent margin, both based on their respective selling prices. (AACSB. Communication Analytical Reasoning) R ENG 3:37 PM 2021-02-01
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