Question
You've just been hired by Wilson Sporting Goods to develop a new pricing strategy for their softball/baseball gloves. You've been told that variable manufacturing costs
You've just been hired by Wilson Sporting Goods to develop a new pricing strategy for their softball/baseball gloves. You've been told that variable manufacturing costs for this year have been $335,000, while fixed manufacturing costs have been $245,000. Additionally, the company has spent $55,000 this year on variable selling and administrative costs and $365,000 on fixed selling and administrative costs. Each glove costs $145 of variable manufacturing costs and $105 of fixed manufacturing costs to produce.
The company reported earnings this year of $200,000, which was short of the company's goal of $250,000. They expect you to find a way to meet their $250,000 earnings goal with your new pricing strategy.
Required:
a) What would be the standard markup percentage for a full cost pricing strategy? What would the price of the glove be? Round all interim calculations to two decimal places.
b)What would be the standard markup percentage for a variable cost pricing strategy? What would the price of the glove be? Round all interim calculations to two decimal places.
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