QUESTION 2: CASE STUDY 2(20%)

With an original goal of selling organic vegetables and food from the family orchard at a roadside stand, Organics & Fresh Food Sdn. Bhd. has become a unique operation featuring a wide variety of locally grown organic produce and farm products that include their own fruit as well as products from the areas finest growers. A number of different products are available, including guavas, papayas, and mangoes; assorted fresh vegetables; and organic fresh eggs and free-range chicken. Prepackaged organic vegetables are still the mainstay of the business, and after adding 20% for all production and 10% labor costs, Organics & Fresh Food determined that the net cost of these vegetables was RM 6.40 per kg.

1. What would be the selling price per kg for the prepackaged vegetables using a 30%, 40% and 50% markup based on cost?

ANS:

Given,

Cost of the product = RM 6.40

Rate of Markup based on cost = 30% Rate of Markup = 40% Rate of Markup = 50%

Calculate selling price using a 30% rate of markup, as follows:

Markup Amount is the product of Rate of Markup and the Cost of the product.

M=M%xC

M= 30%x RM6.40 =1.92

Based on this find the selling price as follows:

Selling Price = Cost + Markup Amount

S=C+M

S = RM6.40+ 1.92 = 8.32

The Selling Price of the product 'A' based on 30% Markup based on cost is RM 8.32

Calculate the Selling Price using a 40% Rate of Markup, as follows:

Find the Markup amount as follows:

M=M%xC

M=40%x6.40= RM2.56

Based on this find the selling price as follows:

Selling Price = Cost + Markup Amount

S=C+M

S = RM6.40 + RM2.56=RM8.96

The Selling Price of the product 'A' based on 40% Markup is RM8.96

Calculate the selling price using a 50% Rate of Markup as follows:

M=M% C

M = 50%RM6.40= RM3.2

Based on this find the value of selling price as follows:

Selling Price = Cost + Markup Amount

S=C+M

S=RM6.40 + RM3.2= RM9.6

The Selling Price of the product 'A' based on 50% Markup is RM9.6

Question

2. In your opinion, what is the best selling price for these organic vegetables and explain.