Sketchy information on firm pricing practices

Reference no: EM13967447

George Constanza is a project coordinator at Kramer-Seinfeld & Associates, Ltd., a large Brooklyn-based painting contractor. Constanza has asked you to complete an analysis of profit margins earned on a number of recent projects. Unfortunately, your predecessor on this project was abruptly transferred, leaving you with only sketchy information on the firm's pricing practices.

A. Use the available data to complete the following table:

Price	Marginal Cost	Markup on Cost (%)	Markup on Price (%)
$100	$25	300.0	75.0
240	72
680	272	150.0	60.0
750		100.0
2,800			40.0
	2,700	33.3
	3,360		20.0
5,800			10.0
6,250		5.3
	10,000		0.0

B. Calculate the missing data for each of the following proposed projects, based on the available estimates of the point price elasticity of demand, optimal markup on cost, and optimal markup on price:

Project	Price Elasticity	Optimal Markup on Cost (%)	Optimal Markup on Price (%)
1	-1.5	200.0	66.7
2	-2.0
3		66.7
4			25.0
5	-5.0	25.0
6		11.1	10.0
7	-15.0
8	-20.0		5.0
9			4.0
10	-50.0	2.0

Reference no: EM13967447

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