Pricing Assignment
For each problem, clearly show and label your work.
1. Assume that TexCo is a widget manufacturer. It costs TexCo$55 (parts and labor) to manufacturer each unit, and it incurs fixed overhead of $3 million per year. If TexCo prices the widgets using a 40% markup on cost, how many widgets must it sell annually in order to break even?
2. If TexCo actually sells 170,000 units this year, what is its net profit?
3. Flip's Flops, a small retailer located in South Padre Island, purchases "Sea Turtle" brand flip flops at a cost of $15 per pair. If the manager prices the flip flops using a 60% markup "on price", what is the selling price to consumers?
4. Assume that it is nearing the end of the summer, and the Flip's Flops still has a large number of "Sea Turtle" flip flops in the store. If the manager marks the price of the flip flops down by 40%, what is the new selling price of this item?
5. Peaksis a snowboard manufacturer, and is working on a new, high-end board to sell to retail stores. These boards will have a suggested retail price of $750. If Peaks knows that these retailers price their boards using a 50% markup on retail, and Peaks wants to be able to achieve a 60% markup on cost, what is the most that it can spend, per unit, to produce this board?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.