Q 11: You are the new sales manager at Gamma Imports. You need to determine which pricing strategy; skimming or penetration, will result in the greatest profits for Gamma Imports. You have been given the Product Cost (CAD)= 12.20, Skimming Retail Price (CAD)= 34.66, Skimming Sales Forecast (Units)= 830, Penetration Retail Price (CAD)=21.48, and the Penetration Sales Forecast (Units)= 3,480. You need to calculate the margin % for the two strategies, the gross margin dollars for each strategy, and which strategy will provide the greatest gross profit. (Gross profit is profit before SG&A expenses.) Which strategy do you recommend? Why?

Skimming Margin%= 64.80%

Penetration Margin%= 43.20%.