How much do sales have to increase for the price cut

Assignment Help Strategic Management

Reference no: EM13217931

Pricing Practice

A pizza parlor sells its large pizza at $15 each. At that price, the current sales are 1,000 units per week. The variable cost per unit is $5. The management is considering the proposal of running a 20% price promotion. Please answer the following questions:

1) How much do the sales of large pizza have to increase for the price promotion to be profitable, if the cost structure for the parlor does not change due to the promotion?

2) Suppose now that the management believes that it is necessary to spend $400 to advertise the price cut to its customers, how much do sales have to increase now for the price cut to be profitable?

3) To make the problem even more realistic, suppose now that 40% of the customers who buy a large pizza also buy a six-pack of coke (the rest of customers do not buy anything else), from which the pizza parlor makes a dollar net profit, how much do sales have to increase now for the price cut to be profitable?

Reference no: EM13217931

Questions Cloud

Explain uniform laws like the ucita and the ueta necessary : Why are uniform laws like the UCITA and the UETA necessary? Does it make any difference if these uniform laws are not enacted in every state?

Determine the distance it travels before it starts : determine the time it takes for the ball to start rolling without slip and its speed when it does so. In addition, determine the distance it travels before it starts rolling without slip. Assume (mu)K = 0.10.

How do we calculate or determine the distances to stars : How do we calculate or determine the distances to stars? What units do we use and what are the limitations (if any) of the method used for such calculations?

Mob violence against abolitionists : A successful, full-scale revolt was nearly impossible for colonial-era slaves to achieve primarily because... The three-day Battle of Gettysburg resulted in... Mob violence against abolitionists...

How much do sales have to increase for the price cut : How much do sales have to increase now for the price cut to be profitable and how much do the sales of large pizza have to increase for the price promotion to be profitable, if the cost structure for the parlor does not change due to the promotion..

Explain tenants in common and joint tenancy : Explain your understanding of the concepts of "tenants in common" and "joint tenancy". What is your opinion on the issue of eminent domain as it pertains to your right to protect your property

Calculate the number of miles the airplane traveled : An airplane was moving with a velocity equal to 300 mph when the velocity was increased with uniform acceleration to 600 mph in 5 min, calculate the number of miles the airplane traveled during that interval of time.

Determine the stated or unstated main idea of each paragraph : Each land tells a unique story through its theme and attention to detail, and the cast members each play a role in the Show. The most integral component of the training is the traditions and standards of guest service. The first of these is called..

Compute the stress level : For this same component and alloy, compute the stress level at which fracture will occur for a critical internal crack length of 6.0mm.

User Account

All Pages