What new cost per unit needed to maintain the original gross

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Reference no: EM132683566

Abercrombie? & Fitch, once the favorite of loyal? teens, is considering lowering prices on all items it sells in an effort to win them back after several years of sales declines.? A& F's total sales were ?$5 billion last? year, but they have been declining in the face of a weak economy and an intensively competitive retail environment. Price reductions are often effective in increasing? sales, but marketers need to analyze how much sales must go up before a price reduction pays off and increases revenue enough to make the it worth doing.

Problem 1: Assuming? A&F's gross profit margin is 45 percent and cost of goods sold represents the only variable? cost, by what percentage must costs decrease to maintain the gross margin percentage of 45 percent if? A&F lowers prices by 15 ?percent?

Problem 2: The new cost per unit needed to maintain the original gross margin percentage is?

Reference no: EM132683566

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