Asume that for each new unit it sells firm also sells 100

Assignment Help Finance Basics

Reference no: EM13476439

(Incremental earnings from lowering product prices)The popularity of iPads pushed Apple's competitors to offer similar touch screen products. One such manufacturer was XYX Industries. The XYZ product had a number of appealing features but the obscurity of the company didn't help product sales. In fact, the product was initially sold for $550, and disappointing sales led XYZ to consider a 10% price break on its product which costs $350 to manufacture and sell.

a) If XYZ goes through with the price adjustment and it leads to total sales of 250,00 units, what are the incremental revenues attributable to the new pricing strategy.

i) $123,750,000,

ii) $36,250,000,

iii) $137,500,000 OR

iv) $50,000,000

b) Now suppose that for each new unit it sells, the firm also sells $100 worth of applications on which the firm has a 35% profit margin(i.e. the firm earns $35 in additional operating profits for each $100 application sales) What is the incremental impact on firms operating profits of the newer lower price strategy under these conditions?

By including the $35 in additional operating profits for applications, we also need to include the 250,00 units x $35=$8,750,000. Thus the incremental revenue of the product attributable to the new pricing strategy should be $45,000,000. True or False?

Reference no: EM13476439

Questions Cloud

Which of the following best expresses how meilander thinks : 1. in words that wound which of the following does vail argue is one result of bullying?a. increased

Careers in technical writing are rising because of : overview careers in technical writing are increasing because of technological demands in business. career opportunities

Imagine that the speaker has changed to rano the older : imagine that the speaker has changed to rano the older brother. write a piece in ranos voice describing the same

What is the role of women in a sport are there women who : what is the role of women in a sport? are there women who provide athletes with a sense of comfort? and escape? what do

Asume that for each new unit it sells firm also sells 100 : incremental earnings from lowering product pricesthe popularity of ipads pushed apples competitors to offer similar

Recall a time in which product packaging positively : product packagingrecall a time in which product packaging positively influenced your purchase decision and discuss the

There are 3 topics to this assignment 1 push-pull marketing : there are 3 topics to this assignment 1 push-pull marketing 2 product advertising and 3 sales promotions.part 1 - the

Subjects for paper will be assigned from the textfrom : subjects for paper will be assigned from the textfrom selected newspaper or other periodical articles or from other

In this assignments there are three topics to this : in this assignments there are 3 topics to this assignment 1 segmenting the market 2 differentiating a productservice

User Account

All Pages