Regression coefficient a Mean of units sold per year 3,103 ring the year 52.06 43.5 economic actIVIty for the 118.7 104.1 \"or several years, a large US gI retal er has been purchasing a pen- and-pencil set from an overseas manufacturer for $24 per set. The retailer's policy is to use a 120 percent markup on such stationery-related gifts. (a) Recently, a currency exchangerate change has enabled the retailer to buy the pen-and pencil set for only $18 per set. The retailer is considering passing along this cost decrease to his customers. If the retailer uses his usual markup for stationery-related gifts, calculate the new price the retailer would charge for this pen- and-pencset (b) A buyer in the retailer's organization has taken the initiative to examine the historical data on this pen-and-pencil set. She obtained data for each of the past 12 years concerning the number of units sold during the year, the price during the year, and an index of economic activity in the retailer's market area during the year, and then carried out a regression analysis on these data. The means for each variable and the regression coefficients from the analysis are as follows: dehumidifiers to companies that own or rent office space. (a) Lombard's materials and labor costs for producing the dehumidifiers are $3,000 per unit and the fixed costs of its dehumidifier production plant are $1.65 million. If Lombard sells a dehumidifier for $4,000 per unit, what is its percent contribution margin? - (b) If Lombard used revenue-based compensation to pay its sales force, what would be a salesperson's sales credit for sellin 20 dehumidifiers at a price of $3,700? h (c) If Lombard used the profit-based compensation method described in the course to pay its sales force and sets the dehumidifier's target price at $4,000 per unit, what would be a salesperson's sales credit for selling 20 dehumidifiers at a price of $3,700? - (d) Explain the benefit to Lombard's management of using the profit-based compensation method of Part (c) over revenue- based compensation for its sales force. Variable Mean Reg n coe Number of units sold per year 3,103 Price during the year 52.06 43.5 Index of economic activity for the 118.7 1041 year Calculate the price elasticity implied by these (c) The buyer found it surprising that the regression coefficient of price had a positive si . Describe the price-quality heuristic, and how it might account for this positive price coefficient. (d) Given the price elasticity you calculated in Part (b), should the retailer go ahead with decreasing the item's price to the price that you calculated Part (al 'he Lombard Company produces and sells officespace dehumidifiers to companies that own or rent office space. (a) Lombard's materials and labor costs for producing the dehumidifiers are $3,000 per unit and the fixed costs of its dehumidifier production plant are $1.65 million. |f Lombard sells a dehumidifier for $4 000 per unit what is its I percent contribution margin? - (b) If Lombard used revenue-based compensation to pay its sales force, what would be a salesperson's sales credit for selling 20 dehumidifiers at a price of $3,700? (c) If Lombard used the profitbased compensation method described in the course to pay its sales force and sets the dehumidifier's target price at $4,000 per unit, what would be a salesperson's sales credit for selling 20 dehumidifiers at a price of $3,700? - (d) Explain the benefit to Lombard's management of using the profit based ..-I- _---_|__-_- I- \"LI - I WIh-__I_I \\ -__-___--__-_-__