Raw Cotton $28.00
Spinning/Weaving/Dyeing $12.00
Cut/Sew/Finishing $10.00
Material Transportation $ 3.00
Factory Fees $16.00
Inspection and Import Fees $14.00
Ocean Freight/Insurance $ 15.00
Warehousing $ 8.00
Packaging $15.00
Promotion $30.00
Customer Shipping $15.00
Given the cost per king-size sheet set above, and assuming the manufacturer has total fixed costs of $600,000 and estimates first year sales will be 50,000 sets Answer the following questions:
Determine the price to consumers if the company desires a 50 percent mark-upon cost. (15 marks)
Answer
Cost per king sheet set will be
$28 + $12 + $10 + $3 + $16 + $14 + $5 + $8 + $15 + $30 + $15 = $ 156
Evaluated first year deals = 50,000 sets
All out fixed expense = $600,000
Normal fixed expense per extra large sheet set = 600,000/50,000 = $12
Absolute Cost per extra large sheet set = $156 + $12 = $168
Wanted edge on deals = 50 %
Let us consider the deal cost to be $100x
On the off chance that edge is 50% of the deals that implies edge = (50/100)*100x = 50x
Along these lines, cost ought to be= $(100 - 50) = $60x
Likewise, cost = $168
→ 168 = 60x
→ x = 166/60 = 2.8
In this way, deal cost = $(100*2.8) = $280appx.
10-14
Presently, Company offers first to the distributer who at that point offers it to retailer. Retailer at that point offers it to clients at a cost of $288
Since retailer gets the edge of 20%, So the edge of retailer will be = (20/100)*288 = $57.6
Henceforth the cost at which retailer gets the sheet set from distributer will be = $(288-57.6) = $230.4
Distributer sells the sheet set to the retailer for $230.4 and gets the edge of 10%
→ edge of the distributer = $(10/100)*230.4 = $23.4
Thus the cost at which distributer gets the sheet set = $(230.4 - 23.4) = $207
In this way, cost at which organization currently offers to the distributer will be $207
Comments
How was deal cost of $100x obtained?
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