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Question
1. For each brand in the following table, calculate the manufacturer's selling price (MSP), the per unit margin, and the gross margin as a percentage of MSP.
Brand X
Brand Y
MSRP
$5.29
$4.99
Volume Discount
30%
35%
Promotion Allowance
15%
12%
Unit Cost
$1.18
$0.74
MSP
Per Unit Margin
Gross Margin %
2. For large retailers, the MSP represents their product cost, which they will mark up to set the retail price. If the retailer has a target margin of 25%, what would the retail prices be for the brands in question 1?
Brand X Retail Price=? Brand Y Retail Price=?
3. Many small retailers will buy through a wholesaler instead of buying direct from the manufacturer. Given the pricing policy for Brand X in question 2, what would be the wholesaler's selling price (WSP) if the wholesaler has a desired margin of 15%? If the retailer has a desired margin of 30%, what would the retail price be? What volume discount would the manufacturer have to offer for the retailer to price at MSRP?
WSP =?
Retail Price ?
Vol. Discount ?
4. Retailers may use some of the promotion allowance to offer special price promotions. If the retailer uses one-third of the allowance for price promotions, what would the average retail price be for Brand X in question 2?
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