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Question - Case Study: Strategic pricing of new product - ABC Limited manufactures high quality copper pots and pans. Company's management accountant is involved in setting price for the company's new Starter Set. This set consist of seven of the most commonly used pots and pan. During the next year, the company plans to manufacturer 10,000 Starter Sets.
The management accountant gathered the following information regarding the cost of developing 10,000 Starter Set.
Variable Costs:
Manufacturing $75,000
Sales Commission $15,000
Total Variable Cost $90,000
Fixed Cost Allocated
Manufacturing $25,000
Total Fixed Cost $25,000
Total Cost $115,000
Required - Explain to the management of ABC Limited, the impact of pricing strategies on business profitability and success.
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