3. The Nguyen Company sells beautiful oriental water fountains through wholesale
ID: 363877 • Letter: 3
Question
3. The Nguyen Company sells beautiful oriental water fountains through wholesalers and retailers. They suspect that the retailer is taking an extra 15% more in markup than they should but Nguyen Management cannot prove it. The retail selling price is $1199.99 and the manufacturing cost to the company is $425.00. The retail markup was 38 percent and wholesale markup was 25 percent.
A. What was the cost to the wholesaler?__________
B. What was the cost to the retailer? ____________
C. What percentage markup did the producer make?__________
4. The Pointer Appliance Company is investigating the additional of a new and improved pulsating blender to its line of consumer appliances. The product chops, grinds, grates and blends smoothies twice as fast as all other blenders on the market. It has a 10 year warranty on the motor and offers a replacement 5 cup glass blender cup for $10.99. The blender is going to require additional expenditures for the production line on the part of the Pointer Company. Management wants to determine what to price the blender at. The total fixed cost associated with manufacturing the blenders is $525,000. The variable cost is $17.99 per unit. Given the costs for adding the blender, management is considering selling the blender at one of these prices: $25.99, $34.99 and $49.99. Calculate the breakeven point in units at each of the selling prices: $25.99, $34.99 and $49.99 and show the calculations. Through your research you know that this is a tough competitive market with many competitors. Most competitors have between 2-8% of the market and the market appears to be growing at a 5% rate per year. The total market for blenders of this type was 1,500,000 units last year. Given that the market leader is selling its blender for $39.99, which price would you recommend and why?
5. Yoplait has new line of Greek yogurt in a 9 oz size. The Marketing Managers plan to test market the product in one small market for three weeks. They has calculated the cost and projected sales for each of the different flavors: Plain cost is .55 each with a projected sales of 10,000 units, Strawberry cost per unit is .60 with a projected sales of 13,000 units, Blueberry cost are .68 per unit with a projected sales of 9,000 units. Each yogurt product will retail at the same price. Using the average cost pricing and a 35% markup what will Yoplait price these product at the retail level ______________
. 6. MyAppliance+ is adding a new wine cooler to its appliance product mix. To implement the new cooler it will have a fixed cost of $300,000 but the selling price is $150.00 with a variable cost of $89.99. MyAppliance+ wants to make at least $60,000 of profit the first year with this new product. How many wine coolers does the company have to sell to reach this profit goal? ___________________
Explanation / Answer
Ans.3)
To be calculated:
a) Wholesaler Cost
b) Retailer Cost
c) Manufacturer Markup Percentage
Given Information:
Retail Selling Price = $1199.99
Manufacturing Cost = $425
Retail Markup = 38%
Wholesale Markup = 25%
Step-1: Retailer Markup is 38%, therefore, retailer cost can be calculated as:
1.38 x (Retailer cost) = (Retailer selling price)
1.38 x (Retailer cost) = 1199.99
Retailer cost = 1199.99 / 1.38 = 869.56 = $870
Step-2: Wholesale Markup is 25%, therefore, wholesaler cost can be calculated as:
1.25 x (Wholesaler cost) = (Wholesaler price) = (Retailer cost)
1.25 x (Wholesaler cost) = 870
Wholesaler cost = 870 / 1.25 = $696
Step-3: Manufacturer cost is $425, therefore, manufacturer markup percentage can be calculated as:
(Manufacturer markup %) = {(Wholesaler cost) - (Manufacturer cost)} / (Manufacturer cost) x 100
(Manufacturer markup %) = {696 - 425} / 425 x 100
Manufacturer markup % = 271 / 425 = 0.64 x 100 = 64%
Answer:
a) Wholesaler cost = $696 b) Retailer cost = $870 c) Manufacturer markup percentage = 64%
Ans.6)
To be calculated:
Number of wine coolers to be sold to reach the profit goal
Given Information:
Total fixed cost = $300,000
Variable cost per cooler = $89.99 = $90
Selling price per cooler = $150
Required profit = $60,000
Therefore, number of coolers to be produced can be calculated as:
Total Profit = Total Selling price - Total Cost price
Total Profit = (150 x Number of coolers) - (Fixed cost + Variable cost)
Total Profit = (150 x Number of coolers) - [300000 + (90 x Number of coolers)]
Total Profit = 150 NOC - 300000 - 90 NOC
Total Profit = 60 NOC - 300000
Therefore, Number of coolers = (Total Profit + Fixed cost) / 60
Number of coolers = (60000 + 300000) / 60 = 6000 pieces
Answer: Number of wine coolers that the company will have to sell to reach the profit goal is 6000 pieces.
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