What factors must rocket sports consider in setting price

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Reference no: EM13926293

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For the past 2 years, 3 companies have dominated the high protein sports bar industry holding a combined 80% of the market. Rocket Sports currently ranks second in the market. Its management is considering introducing a new Heatr line of winter protein bars utilizing a groundbreaking new protein form. Rocket Sports produces the bars in a single department and all materials are added at the beginning of the process. As corporate cost accountant you have developed the following cost of production information for the Heatr line.

WIP Inventory:

Units

Costs

January 1 (50% complete)

2200

 

Direct Materials

 

$2080

Conversion Costs

 

$620

December 31 (60% Complete)

2000

 

Direct Materials

 

$1880

Units Started during the year

458500

 

Materials added

 

430990

Conversion added

 

229400

Selling and administrative costs are $1.60 per unit. Each of Rocket Sports' main competitors is selling a protein bar. Company X sells its bar for $4.10 and Company Y sells its bar for $4.05. Rocket Sports tries to earn a profit of 20% of the unit cost.

1. What factors must Rocket Sports consider in setting their price?

2. Using the average costing method what is the cost per unit?

3. Recommend and defend a unit selling price range for the Heatr protein bars.

Reference no: EM13926293

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