The standard price for one dozen pierogis has been $5.99 per dozen. Depending upon the ingredients, the competitors’ prices range from $2.79 to $5.39 per dozen in most grocery stores. A breakdown of the cost structure revealed total variable costs of $1.87/dozen and total fixed costs of $0.20/dozen. Using the target price of $5.99, determine the price point the company should use for the wholesaler. Does this price point allow the company to maintain its desired 45 percent mark-up?

The standard price for one dozen pierogis has been $5.99 per dozen. Depending upon the ingredients, the competitors’ prices range from $2.79 to $5.39 per dozen in most grocery stores. A breakdown of the cost structure revealed total variable costs of $1.87/dozen and total fixed costs of $0.20/dozen. Using the target price of $5.99, determine the price point the company should use for the wholesaler. Does this price point allow the company to maintain its desired 45 percent mark-up?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 14E: Many different businesses employ markup on cost to arrive at a price. For each of the following...

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