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Consider a retailer considering a 33-percent-off sale on blenders currently priced at $54. The retailer pays $29 per blender from the manufacturer.
a. What is the initial contribution margin?
b. What is the proposed sale price and the percent change in price captured per unit sold?
c. What is the volume hurdle that must be achieved for the sale on blenders to improve profits through the sale of blenders alone?
d. Suppose that instead of having this sale, a young pricing expert suggested that the price of blenders be increased to $59. What would be the allowable loss in sales of blenders that would still leave the retailer in a more profi table position?
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