What is odd about setting the price based

Reference no: EM13300483

Wendel stove company is developing a "professional" model stove aimed at the home market. The company estimates that variable costs will be $2,000 per unit and fixed costs will be $10,000,000 per year.

a. suppose the company wants to set its price equal to full cost plus 30%. To determine cost, the company must estimate the # of units it will produce and sell in a year. Suppose the company estimates that it can sell 5,000 units. What price will the company set?

b. What is "odd" about setting the price based on an estimate of how many units will be sold?

c. Suppose the company sets a price as in part a, but the # of units demanded at that price turns out to be 4,000. Revise the price in light of demand for 4,000 units.

d. What will happen to the # of units that will be sold if the price is raised to the one you calcuated in part c?

e. Explain why setting price by marking up cost is inherently circular for a manufacturing firm.

Reference no: EM13300483

Questions Cloud

Calculate the profit-maximizing price for roverplus brand : Calculate the profit-maximizing price for the roverplus brand taking into account th effect of the sales of roverplus on sales of the royal dog food brand.

Explain as a reaction proceeds backwards toward equilibrium : Select all of the correct statements about equilibrium from the choices below. At equilibrium the rates of forward and reverse reactions are equal. As a reaction proceeds backwards toward equilibrium the reverse rate drops. At equilibrium all reac..

Find what diameter pipe is required to triple the capacity : Given an 18-in. concrete conduit with a roughness coefficient of n = 0.013, s = 0.02, and a discharge capacit of 15 cfs, what diameter pipe is required to triple the capacity

How far should an object be placed from the objective lens : To make a simple microscope a student places two converging lenses of +20 D at opposite ends of a 34 cm long tube. How far should an object be placed from the objective lens

What is odd about setting the price based : Wendel stove company is developing a "professional" model stove aimed at the home market. The company estimates that variable costs will be $2,000 per unit and fixed costs will be $10,000,000 per year.

Find the separation of the bright fringes on the screen : For a double-slit experiment, the inside edges of two 1.73-mm wide slits are separated by a distance of 1.35 mm. find the separation of the bright fringes on the screen

Explain how much heat is needed to warm 250 g of water : How much heat is needed to warm 250 g of water from 22 C to 98 C? The specific heat of water is 4.18 J/g . Be sure to include units but do not use scientific notation.

Determine what is the runoff rate into the inlet grate : A paved parking lot section has a uniform slope over a length of 100 m (in the flow direction) from the point of a drainage area divide to the inlet grate, which extends across the lot width of 30 m.

Cal;culate the volume of bodily fluid lost per hour : A 60.0-kg runner expends 325 W of power while running a marathon. determine the volume of bodily fluid (assume it is water) lost per hour

User Account

All Pages