Spriware Case
Case Study: Polyprin
Submitted to: Professor Parker
By: Evan von Kleist-Bernard
16/10/2013
1.a) Using the domestic price PolyPrin receives and the normal mark-ups, distribution costs and duties, calculate a possible retail price in the Australian market.
PolyPrin sells their products at roughly 30$ per item. This is found by dividing the annual revenue by the amount of units it produces and sells domestically; the total amount of dollars charged per item. In this case, 90 million in revenue divided by 3 million in production. (90M/3M=$30/unit)
With the addition of import duties (5%) and shipping insurance ($5 per item) we see the $30 rise to 36.75 ((30+5) x 1.05). An additional 10% markup is added from the manufacturer to retailer raising the price again to 40.43 (36.75x1.1) before finally being marked up 25% for the customer, a final retail price of $50.53 USD (40.43x1.25).
b.) Determine the cost to produce one dress, and using this plus the normal mark-ups and distribution costs and duties, calculate the potential retail price in the Australian market.
To determine the cost of producing one dress we will need to identify all the factors contributing to cost, that is, fixed and variable cost. Our total variable costs for the dresses are materials ($22M) and energy ($6M), which amounts to $28M, divided by the amount of units, (3M) giving us to $9.3 per dress. Now we have fixed costs, which are labour ($12M), plant overhead ($3M) and SG&A Costs ($14M), equaling $29M, divided by the total number of units (3M) for a total of $9.6 per dress. The full cost of the dress is $18.9 per dress. (See calculations below)
Total variable (22)+(6) 28/3= 9.3
Items produced (3)
Total fixed cost (12) + (14) +(3) 29/3= 9.6
Items produced (3)
($9.3) + ($9.6) = $18.9
Now we add the additional cost of insurance per item, ($5), import duties (5%), manufacturer to retail markup (10%) and retailer to
Submitted to: Professor Parker
By: Evan von Kleist-Bernard
16/10/2013
1.a) Using the domestic price PolyPrin receives and the normal mark-ups, distribution costs and duties, calculate a possible retail price in the Australian market.
PolyPrin sells their products at roughly 30$ per item. This is found by dividing the annual revenue by the amount of units it produces and sells domestically; the total amount of dollars charged per item. In this case, 90 million in revenue divided by 3 million in production. (90M/3M=$30/unit)
With the addition of import duties (5%) and shipping insurance ($5 per item) we see the $30 rise to 36.75 ((30+5) x 1.05). An additional 10% markup is added from the manufacturer to retailer raising the price again to 40.43 (36.75x1.1) before finally being marked up 25% for the customer, a final retail price of $50.53 USD (40.43x1.25).
b.) Determine the cost to produce one dress, and using this plus the normal mark-ups and distribution costs and duties, calculate the potential retail price in the Australian market.
To determine the cost of producing one dress we will need to identify all the factors contributing to cost, that is, fixed and variable cost. Our total variable costs for the dresses are materials ($22M) and energy ($6M), which amounts to $28M, divided by the amount of units, (3M) giving us to $9.3 per dress. Now we have fixed costs, which are labour ($12M), plant overhead ($3M) and SG&A Costs ($14M), equaling $29M, divided by the total number of units (3M) for a total of $9.6 per dress. The full cost of the dress is $18.9 per dress. (See calculations below)
Total variable (22)+(6) 28/3= 9.3
Items produced (3)
Total fixed cost (12) + (14) +(3) 29/3= 9.6
Items produced (3)
($9.3) + ($9.6) = $18.9
Now we add the additional cost of insurance per item, ($5), import duties (5%), manufacturer to retail markup (10%) and retailer to