Data

MSRP(Manufacturer’s Suggested Retail Price) = $800

Retailers Markup = 30% = 0.30

Wholesalers Markup = 10% = 0.10

Solution

To determine the price Computer Firm will charge wholesalers, we must first subtract the retailer’s margin from the retail price to determine the retailer’s cost ($800 x 0.30) = $240). The retailer’s cost is the wholesaler’s price, so Computer Firm next subtracts the wholesaler’s margin ($240 x 0.10) = $24).

1) Retailers Markup = $ 800 x 0.30 = $ 240

2) Wholesaler Markup = $ 560 x 0.10 = $ 56

So Now,

Suggested Retail Price = $800 minus retail margin (30%) = $-240

Retailer’s cost/wholesaler’s price = $ 560 minus wholesaler’s margin (10%) = $- 56

Wholesaler’s cost/Computer price = $ 504

Q2) If the unit variable cost for each computer is $350 and the manufacturer has fixed costs totaling $2 million, how many computers must this manufacturer sell to break even? How many must it sell to realize a profit of $50 million?

Formula

1) Breakeven = Total Fixed Cost/Contribution

1.2) Per Unit Contribution = Selling price - variable cost

2) Unit volume = fixed cost + profit goal /Selling price - variable cost

Data

Variable Cost = $350

Fixed Cost = $2 million

Selling Price = $800

Profit Goal = $50 million

Solution

1 Breakeven = $2,000,000 / $800 -$ 350 Breakeven = 4444.44 Units or 4445 Units Thus, at the given variable cost and Fixed Cost & the selling Price, firm’s will break even at 4444.44 units.

2 Unit Volume = $2,000,000 + $50,000,000 / $800 - $350 Unit Volume = 115555.5 Units or 115556 Units

Thus, to earn a