Question
S2 Prime Breakeven Calculation Thoughts I. Given overhead divided by projected sales = overhead per unit $1,000,000 2,000,000 = $.50 per unit (allocated fixed cost
S2 Prime Breakeven Calculation Thoughts
I. Given overhead divided by projected sales = overhead per unit
$1,000,000 2,000,000 = $.50 per unit (allocated fixed cost per unit)
Direct cost less quantity discounts
Duo-PakRefill
$2.68$2.04
-.08-.04
$2.60$2.00
Direct cost per unit plus allocated fixed cost per unit
Duo-PakRefill
$2.600$2.000
+.500+.500
$3.100Cost per unit$2.500
Calculate the even cent breakeven SRP for the Duo-Pak and the Refill.
A.10 % Brokers' commission and price to retailers*
Duo-PakRefill
$3.100Cost per unit90 %$2.500
Brokers' Commission10 %*
$3.444Price to Retailers 100 %
B.Retailers margin and breakeven SRP*
Duo-PakRefill
$3.444Price to Retailers 75 %
Retailers margin25 %*+.926
Breakeven SRP 100 %
Even cent Breakeven SRP
*markup on selling concept required
II.Statement of Problem/Opportunity
A.Primary - Undetermined pricing strategy
B.Secondary
1.Target market not established
2.Positioning strategy in question
3.Undetermined IMC plan and budget
4.Competitors' reaction to a Prime introduction not analyzed
III.Recommended Action
A.Primary - Establish an initial SRP for the Duo-Pak of $?.?? And Refill of $?.??.
B.Secondary
1.?.??
2.?.??
3.?.??
4.?.??
As you establish a SRP for the Duo-Pak and Refill, a breakeven (BE) suggested retail price (SRP) must be determined first using the given numbers (unit method is recommended).The brokers' commission and retailers' markup are given as percent of selling.
Following BE set your actual SRP considering 1) Psychological pricing concepts, 2) Captive-Product concept, 3) Premium pricing concept, 4) Competitive Analysis suggest best if Windex does not react
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started