Pricing Questions

12. Basedon theproduct design,sales strategy, and the breakdown of costs (in Exhibit 3), has OLPChistorically been usinga cost-plus pricingapproach oratarget pricingapproach? Briefly explain.

13.Based onExhibit 3,assume that theaverage selling priceof thelaptop willbe$188, andthatQuanta ischarging OLPC $177 foreach laptop. If OLPC eventually

would like eachlaptop tosell for$100, by how much mustthe unitvariable costchange tomaintain its currentcoverage of administration andoverhead costs?

14.Based onExhibit 3,assume thatthe average selling priceof thelaptop willbe$188, andthatQuanta ischarging OLPC $177 foreach laptop. If OLPCeventually wouldlike eachlaptop tosell for$100, by how much musttheunitvariable costchange tomaintain itscurrentmarkup percentage?

15. Briefly explain the difference in your responses to parts 13 and 14.