The manufacturing cost of her rackwhen made in reasonable quantitiesis approximately $2.80 if it is painted black and $3.60 if it is chromed. Similar products have been selling at retail in the $9.95 to $19.95 range. The sales and administrative overhead to be charged to the division will amount to $95,000 a year. This will include Keatings salary and some travel and office expenses. She expects that a number of other products will be developed in the near future. But for the coming year, she hopes the shoe rack will account for about half the consumer products divisions sales volume.

Evaluate Wendy Keatings strategy planning so far. What should she do now? What price should she set for the shoe rack?

1. If wire solution took a 30% markup on the black shoe rack and a 35% markup on the chrome shoe rack what would the selling prices be for each? Is it correct with $3.64 and $4.86. respectively.

2. In this scenario, Wal-Mart elected to purchase the shoe racks and they took a 40% markup on each shoe rack what would final customers (Wal-Mart consumers) pay for each shoe rack?

3. Since they are just starting the consumer division, Wire Solutions may decide to focus on just the chrome shoe rack because it appears to be a better quality product. Lets assume a variable cost of $2.20 per chrome rack, and taking the current 35% markup to calculate selling price outlined in question #1, how many chrome shoe racks would they need to sell to break even?

4. If wire solution wanted the chrome shoe rack to sell for $9.99 in retail stores, what should they sell it to retailers for assuming the retailers will take 45% markup? Calculate wire Solution markup percentage based this selling price.