Pricing Problems

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Pricing Problems attached. Please show all work!

  • You have fixed costs allocated to the production of the pasta sauce of $4,000,000. Variable costs are $2.35 per jar of sauce. The MSRP for the sauce is $8.50 per jar. You are selling your product to retailers for $3.50 per jar.
  • Assume a retailer buys your pasta sauce for $3.50 per jar. His business requires that he prices gourmet products such as the pasta sauce with a with a 125% markup on cost. What is the least he can sell the pasta sauce for and have that markup percentage?
  • An appliance retailer knows that to break even and make a profit he needs to have a minimum retailer margin (also referred to as a contribution margin or gross margin) of at least 55% If he is to sell a television for the manufacturer’s suggested retail price of $649.99, what is the most he can pay the manufacturer for the TV and maintain his margin?
  • An industrial paper distributor salesperson is developing a quote for a year’s contract to supply a customer with paper towels. His cost for each case of towels is $36.00. His firm requires that he have a 30 percent margin so he is using a mark-up on selling price calculation to price the towels. What will his quote be per case of towels if he uses a 30% mark-up on selling price?
  • How many jars of sauce must you sell to break even?
  • How much must you sell in dollars to break even?
  • How many jars of sauce must you sell to break even plus make a profit of $700,000.
  • What if the sauce is offered to consumers in packs of 6 jars with an MSRP of $45.00. Four of the packs of 6 jars are in a case. You only sell whole cases to your retailers. With this being said, how many cases, packs, and jars must you sell to break even?

Bonus for extra points

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