Evaluation Of Short Term Pricing Decisions

If the company decided to sell the new product at price of D.Cr. 8.20, that means the full fixed expense of 1.20 is covered and the company will make high profit. However, the selling price of D.Cr. 8.20 is very high and under this price the company will sell the new product at a lower volume than what the company planned sale volume in the budget and that will affect the company in the market as a strong competitor in the food manufacturing. According to the case, the company sales volume drop to 30 tons when the product was sold at the price of D.Cr. 8.2. Thus, my recommendation are as follows:

2.) What is the ‘relevant range’ for the cost structure? In other words, at what volume might you expect the fixed and variable costs to change appreciably?

F. Contrast how a person would initially respond to a relatively large increase in the price of a product in the short run as opposed to how that same person might react to that same price increase over a longer time horizon (i.e., the long run), using the “Consumer's Time Horizon” concept.

Applying close attention to changes within ‘fixed’ costs can be crucial and will improve the performance of management decisions in the future as you have valid data to hand. The pricing in times like the recession for rent could always be changing and product prices can go up or down according to competitors within the marketing environment, using invalid information for predictions on what will happen with the business is suicidal and managing resources and budgets can cover this problem and in turn improve the companies performance by making accurate marketing decisions that will benefit the company.

Swing Manufacturing and Steady Manufacturing both operate in the widget industry, but with radically different cost structures. Swing is a capital-intensive, automated manufacturer, while Steady is a labor-intensive "job-shop." Monthly operating data are as follows:

• At the maturity stage, the extra cost, although very small, can be a real disadvantage because during this period, the market becomes very competitive and many players enter the same field causing price to drop. Customers also become more price-sensitive. However, the benefit of better forecasting demands significantly helps lower the level of inventory.

1. Assume that a company is budgeting to sell 2,500 units of a product at a selling price per unit of $32. The variable cost per unit is $26 and total fixed costs are $5,000.

The emergence of high-low pricing tactics materialized out of an earnest desire to retain a profitable margin of sales. Usually, this pricing strategy involves a period of high, often subjective, initial prices followed by a period of low discount prices. One can attribute the effectiveness of using the

Short run needs at least one fixed input because the quantity of product will not be influence by the ups and downs of the economic. Where else, long run uses marginal cost because the company had operated earlier and longer that it is stable and it will not get influence by the economic problems. Assume, that the world economy experience a decline in money. This will force the companies to reduce their cost of production and manufacturing rapidly. The comparison is to show that fixed cost is important for short run company as it is

Fixed costs are constant and have an impact towards profits despite the number of items sold. Reducing the fixed cost amounts is a sustainable way to make more profits and increase operating leverage (Edmonds & Tsay & Olds). Suggested by Reiss, outsourcing is a way of turning fixed costs into variable costs. Variable costs have a dependence of cost based on production or sale of the product (Reiss, 2010).

decisions, managers usually try to keep in mind the short and long term costs that might occur in

The numbers of pricing strategies which can be used are the choice of pricing strategies that will depend to some extent on the long term objectives of the business- how it wishes to position itself in the marketplace, or how important its financial needs are. The examples of long term objectives are:

Relevant costs are those that are avoidable or can be eliminated by choosing one alternative over another. Relevant costs are also known as differential, or incremental, costs. In general, variable costs are relevant in production decisions because they vary with the level of production. Likewise, fixed costs are generally not relevant, because they typically do not change as production changes. However,

As is known, pricing is one of the most important steps for business plan which needs good research, calculations and formulations. There are different pricing strategies to put into effect due to the market and product conditions, such as premium pricing, penetration pricing, economy pricing, price skimming(Voice Marketing, 2012). These four pricing strategies are main pricing policies. They form the bases for the exercise. However there are other important approaches to pricing. These pricing strategies are: Psychological pricing, product line

A good pricing strategy can help you determine the price point that maximizes your profit when you sell your product or service. Although the customer does not buy goods that are too expensive, if the store's commodity price is too low to bear all the commercial costs, then it will bring a loss.