Viki's Flower Shoppe Congratulations! You have been hired as the new pricing manager for the very successful line of florists, Viki's Flower Shoppe. Viki's sells the usual assortment of flowers, plus small gifts and candy boxes. Your first task is to analyze the pricing structure for a new flower arrangement that Viki's hopes will be a best seller. The flowers cost the store $9 for each arrangement. The vase costs $7. The florists are paid $6 per arrangement; Rent for the store and overhead expenses for utilities, etc. total about $60000 per year. Based on market conditions, Viki's expects to sell 3000 arrangements in one year. They would like to achieve a return on sales of 12%. . 1. Calculate the unit cost for each arrangement based on this projected sales figure. Unit costs (UC) = VC + FC / Sales units = 22+60000/3000= 42$ 2. Calculate the minimal cost-based price for each arrangement. Markup Price = UC / (1-Mark-Up %) = 42/(1-12%)=47.72 3. Estimate the Break-even point (in units and $) for this price Breakeven = FC / (Price - VC) = 60000/(47.72-22)=2332.814 4. Estimate the revenue and profit realized at the end of the year Revenue = Price * Sales units = 47.72*3000=143160 Profit = (Price - UC) * Sales units = (47.72-42)* 3000=17160 5. After a successful year, Viki's decided to change the price to $49.99 and managed to sell 2800 arrangements next year. Calculate the price elasticity for their flower arrangements. Is the price elastic (>1) or inelastic (1) Elasticity = (((Sales 2 - Sales 1) / Sales 1) / (Price 2 - Price 1) / Price 1)) = 6. How the pricing decision affected their annual revenue and profit