Question
The market price for a product has been $64 per unit, but competitive pressures have reduced the market price to $60. The firm manufactures 15,500
The market price for a product has been $64 per unit, but competitive pressures have reduced the market price to $60. The firm manufactures 15,500 of these products per year at a manufacturing cost of $46 per unit (including $25 fixed cost and $21 variable cost per unit). Other selling and administrative costs for the product are $1 per unit.
1-
The firm ignores competitive prices because it has a differentiated product. It uses full manufacturing costbased pricing with a 42% markup. What is the firms price?
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2-The firm ignores competitive prices because it has a differentiated product. It uses cost life cyclebased pricing with a 28% markup. What is the firms price?
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