Question
Right now, original unit price = $100, unit variable cost = $20, fixed cost = $70. You are considering a 10% price increase. Suppose UVC
Right now, original unit price = $100, unit variable cost = $20, fixed cost = $70.
You are considering a 10% price increase. Suppose UVC and fixed cost will stay the same. To maintain the same amount of total contribution, demand can only afford to go down by how much? Show detailed calculations. Hint: check Ch4Pricing1.2
Q4(17 pts):
Charts above. Note: UVC = unit variable cost. The horizontal axis represents customer segments of varying sizes. The maximum perceived values are shown below.
A) Why is $10 the optimal price to maximize total contribution if a single price point is used? Show through calculations (5 pts). Hint: calculate the total contribution at each of the five prices and then compare.
B) Show through calculations how you get $4950 as the total contribution in the 3rd scenario (5 pts).
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
