Management has determined that their product should sell for $10 per unit. To manufacture the product, the firm spends $2 each for materials and $1.35 for labor. The company expects that retailers will require a 20% margin in order to stock the product for customers to purchase and wholesalers will require a margin of at least 18%.
a) What price should the producer (or manufacturer) charge to wholesalers?
b) What is the unit margin for the product for the manufacturer in dollars?
c) What is the unit margin for the product for the manufacturer as a percentage?