Explore BrainMass

Explore BrainMass

    Carol Vessey Current Pricing Practices: Optimal Markup on Cost and Price

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Carol Vessey is a managing partner of Dry Air, Inc., a New Orleans-based dehumidifier-systems distribution firm. Vessey has been asked to complete an analysis of profit margins for the firm. Unfortunately, her predecessor on this project was abruptly transferred, leaving little information on the firm's current pricing practices.
    A. Use the available data to complete the following table. (COPY AND PASTE THE TABLE TO YOUR WORD DOCUMENT.)

    © BrainMass Inc. brainmass.com October 5, 2022, 5:57 pm ad1c9bdddf
    https://brainmass.com/business/finance/carol-vessey-current-pricing-practices-optimal-markup-cost-390419

    Attachments

    SOLUTION This solution is FREE courtesy of BrainMass!

    ** Complete solution in the attached Word document.

    Carol Vessey is a managing partner of Dry Air, Inc., a New Orleans-based dehumidifier-systems distribution firm. Vessey has been asked to complete an analysis of profit margins for the firm. Unfortunately, her predecessor on this project was abruptly transferred, leaving little information on the firm's current pricing practices.
    A. Use the available data to complete the following table. (COPY AND PASTE THE TABLE TO YOUR WORD DOCUMENT.)

    Model Price Marginal Cost Markup on Cost Markup on Price
    220 $200 $ 120 66.7% 40.0%
    440 375 200 87.5 46.7
    660 600 500 20.0 16.7
    880 900 600 50.0 33.3
    1,000 1,200 1,000 20.0 16.7

    B. Calculate the optimal markup on cost and optimal markup on price for each model, based on the following estimates of the point price elasticity of demand. (COPY AND PASTE THE TABLE TO YOUR WORD DOCUMENT.)

    Model Price Elasticity of Demand, e P Optimal Markup on Cost, MOC* Optimal Markup on Price, MOP*
    200 - 2 100% 50%
    440 - 3 50.0 33.3
    660 - 4 33.3 25.0
    880 - 5 25.0 20.0
    1,000 - 10 11.0 10.0

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com October 5, 2022, 5:57 pm ad1c9bdddf>
    https://brainmass.com/business/finance/carol-vessey-current-pricing-practices-optimal-markup-cost-390419

    Attachments

    ADVERTISEMENT