Assignment:
Moor Company is having a profitable year. Its only product sells to wholesalers for 80 cents a can. Its managers feel that a 60 percent gross margin should be maintained. Its manufacturing costs consist of: material, 50 percent of cost; labor. 40 percent of cost; and overhead, 10 per-cent of cost. Both material and labor costs in-creased 10 percent since last year. Determine the new price per can based on its present pricing method. Is it wise to stick with a 60 percent margin if a price increase would mean lost customers? Answer using graphs and MO-MR analysis. Show a situation where it would be most profitable to (a) raise price, (b) leave price alone, (c) reduce price.