Answered: Annual Fixed Variable Costs Location…

Annual Fixed Variable Costs Location Costs per Shipment Denver $5,000,000 $4.65 Santa Fe $4,200,000 $6.25 Salt Lake City $3,500,000 $7.25

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
Calculate the average revenue per night. Rates & availability2347892Review Itinerary367495Guest Info103471Confirmation72498Revenue$ 23,464,220Room Nights143285
Breakeven between Two AlternativesGiven:Option A – Buying a MachineFC = 400,000.00 pesosSV = 80,000.00 pesosi = 10.00%n = 8 yearsAnnual Maintenance cost = 5,000.00 pesos/yearProduction cost = 800.00 pesos/dayOutput = 40 units/dayOption B – Manual ManufacturingAnnual cost = 30,000.00 pesos/yearProduction cost = 1200.00 pesos/dayOutput = 30 units/daya. Option A Annual Cost Equation = ?b. Option B Annual Cost Equation = ?c. Units per year for Breakeven = ?
A firm’s manager must decide whether to make or buy a certain item used in the production of vending machines. Making the item would involve annual lease costs of $150,000. Cost and volume estimates are as follows:Make BuyAnnual fixed cost $150,000 None Variable cost/unit $ 60 $ 80 Annual volume (units) 12,000 12,000 a. Given these numbers, should the firm buy or make this item?b. There is a possibility that volume could change in the future. At what volume would the managerbe indifferent between making and buying?
What options are available for altering the capacity of (a) anelementary school, (b) a prison, and (c) an airline?
A leading manufacturer of video games is about to introduce four new games. The accompanying tablesummarizes price and cost data, Combined fixed costs equal $600,000. A marketing research study predicts thatfor each unit sold of Diablo, 2 units of Call of Duty: Modern Warfare, 3 units of Sekiro and 4 units of Starcraft IIwill be sold.GamesDiablo Call of Duty Sekiro Starcraft IISelling Price (in dollars) 55 48 33 22Variable cost/unit (in dollars) 22 17 12 11a) How many product mix units must be sold to break even?b) How does it translate into sales of individual games?
7.6 Sacramento Memorial Hospital has the following annual financial data and operational metrics: Number of beds 250 Total inpatient admissions 12,250 Total outpatient visits 90,754 Total patient revenues $111,900,050 Outpatient mix 16.2% Medicare payment percentage (revenues) 28.0% Average length of stay 5.8 days Net price per discharge $7,653 Cost per discharge $6,292 What is the hospital’s profit per discharge? What is the hospital’s total inpatient and total outpatient revenue? (Hint: Applypatient mix metrics to total revenues.) Verify your part b answer for total inpatient revenue using volume and profitability metrics. What are the hospital’s total revenues from Medicare patients What is the total number of inpatient days? What is the hospital’s occupancy rate? (Hint: Start by calculating available bed days.)
The Best Wheels Bicycle Company produces bicycles indifferent styles for boys and girls, in heights of 26 inchesor 20 inches, and with 10 speeds, 3 speeds, or 1 speed.a. How many different kinds of bicycles does BestWheels make?b. Construct a modular bill of material for Best Wheels(one level). Assume that bike sales are equally splitbetween boys and girls, 26-inch bikes are preferredtwo-to-one to 20-inch bikes, and 3-speed bikes accountfor only 20% of sales. The remaining sales are dividedequally between 10-speed and 1-speed bikes.c. If bicycle sales are expected to reach 10,000 over theholiday shopping season, how many 26-inch bikesshould Best Wheels plan to produce? How many 10-speed bikes?
Lucy always wanted to live in downtown San Francisco. For 10 years she has worked as a manager at an investment banking firm, where she is well paid. However, the most affordable condo is still more than $1 million more than she wants to pay. Although Lucy has the money to purchase the condo, she cannot justify to herself paying so much money for one person—even for a condo in the middle of downtown San Francisco. Lucy ______ part of the market for condos in downtown San Francisco because she ___________________ to buy. I believe the answers are is and has the ability Am I correct?
7. Mrs Bayson completed Fashion Design Programme at a Technical University in Ghana . Mrs Bayson decided to join a dress-making group to gain experience for her career. In the course of her internship Mrs Bayson has observed that there are always a lot of beautiful pieces of leftover clothes that go waste thereby requiring the shop to spend money to dispose them. She is then thinking of designing fashioned carrier bags with the leftover clothes. Efua needs ideas on what factors to consider in decide to go or not go for the development of the conceived business idea. (a) Discuss four key things to consider in deciding to pursue or not to pursue the conceived business idea (b) Discuss one social or environmental problem that would be solved by Efua’s business idea should it become a reality
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