...BUS 640 Week 5 Price Quotes and Pricing Decisions Applied Problems To Buy This material Click below link http://www.uoptutors.com/BUS-640-ASH/BUS-640-Week-5-Price-Quotes-and-Pricing-Decisions-Applied-Problems 1. Your organization, Bright Paints, is among a dozen organizations producing a specific reflective paint utilized for traffic signals. The State Department of Transportation has requested tenders to provide 10,000 gallons of blue reflective paint to be supplied in 2 months. You may predict fitting in a manufacturing run of the blue paint and have made a decision to quote on the work. You compute your incremental expenses for this job to be $76,200. This specific deal is standard, similar in all in ways to hundreds of agreements you have bid on during the last few years. Your pricing policy has been to apply a mark-up to incremental expenses to arrive at the bid price. Your mark-up has been more when you had lots of orders and reduced when you had very few or no orders to complete. You have gathered data pertaining the mark-up rate used as well as the share of deals got at each mark-up rate, as follows. Mark up rate (%) | Bid Price | Contribution | EPVC | Percent of contracts won | 0 | $76,200 | 0 | 0 | 95.9 | 10 | $83,820 | $7,620 | .0848 | 84.8 | 15 | $87,630 | $11,430 | .0981 | 65.4 | 20 | $91,440 | $15,240 | .0826 | 41.3 | 25 | $95,250 | $19,050 | .0392 | 15.7 | 30 | $99,060 | $22,860 | .009 | 3.0 | 35 | $102,870 | $26,670 | 0 | 0 | | | | | |...
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...manufactures a range of chocolate based products * The company has 2 profit centres, where managers have autonomy in decision making * Processing Division (comes first, processing transfer) * Chocolate Division (comes next, chocolate receive) * The Processing Division processes raw cacao beans into “Chocolate Liquor” * The Chocolate Division uses Chocolate Liquor as an ingredient in its products * The Processing Division has the following options * Sell Chocolate Liquor to an external market * Transfer Chocolate liquor internally to the Chocolate Division * The Chocolate Division has the following options * Purchase Chocolate Liquor internally from the Processing Division * Purchase Chocolate Liquor from an external market Profit is the only critical thing Profit is the only critical thing 4 PARTIES RELEVANT COSTS * The first issue to address IS NOT the transfer price itself * First we must determine, from a corporate perspective, whether the transfer should actually take place– i.e. The Optimal Sourcing Decision * Should the Processing and Chocolate Divisions undertake an internal transfer of the Chocolate Liquor? OR * Should the Processing Division sell and the Chocolate Division purchase the Chocolate Liquor externally? Information required to make the optimal sourcing decision Costs of Processing Cacao Beans into 1 litre of Chocolate Liquor Cacao beans (1.2 kgs @ $3.00 kg) $3.60 Other...
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...with pricing disputes, and individual division managers lose the flexibility and other advantages of autonomous decision making. 2) Centrally established transfer price policies - Externally based market prices are generally considered the best basis for transfer pricing when a competitive market exists for the product and market prices are readily available. - A drawback is that this method may require a change to the compensation/incentive system of Division managers Market price-based transfer pricing – A policy that sets transfer price at the market price or a small discount from the market price. From the company’s perspective, this is fine as long as the supplying unit is operating at capacity. Cost basis policy – A seller operating below capacity should transfer at the differential cost of production (variable cost). A seller operating at capacity should transfer at the market price. A seller operating below capacity is indifferent between providing the product and receiving a transfer price equal to the seller’s differential outlay cost or not providing the product at all. Full absorption cost-based transfers – if measures to market price are unavailable, impossible to compute opportunity costs for the general rule. This method results in transfer prices somewhere between variable costs and market prices. 3) Negotiated transfer prices - Discussion and agreement between the buying and selling parties is an option when autonomy is...
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...marketing mix to influence the purchase decisions made by consumers. The marketing mix consists of the 4 Ps, product, place, price and promotion. It analyses the brand positioning, this is described as the place the brand occupies in the mind of a buyer. Also this report compares the consistency of the marketing mix internally with the brand positioning. This report refers to a single purchase, and my own experiences with Nyal Dry Cough, bought from Coles on Glenhuntly road in Elsternwick on the 8/8/2015. 2.1 The product and the product category I chose the product Nyal Dry Cough. It is in the product category Medicine, the sub category is Cold and flu, sub-sub category is cough syrup, and some sub-sub-sub categories can include dry, chesty or bronchitis cough, non drowsy and drowsy. 2.2 The 4 Ps 2.2.1 Product Nyal Dry Cough is a sweet liquid that consumers buy to relieve dry coughs. Nyal Dry Cough has a recommended dosage on the box depending on age, which is consumed by swallowing to coat the throat. It was packaged in a small rectangular cardboard box with bright colors of red orange and yellow. It had large writing on the front to clearly identify the brand as well as all the sub categories of the product. Figure 1 illustrates the packaging of this product. Figure 1. Nyal dry cough https://www.priceline.com.au/nyal-dry-cough-medicine-non-drowsy-200-ml In my opinion the packaging could influence the purchase decision. It stands out in comparison to the...
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...manufacture and even many times usable and durable, the key to people at Precision Worldwide must decide whether to match the competitor's product, when to do so, how to price or what sustainable competitive advantage it needs to adopt during the next strategic period, given that it holds a large inventory of its now inferior product. This issue concerns the steel and plastic rings which the company, Precision Worldwide, Inc. (PWI) is opting to produce as a matter of competing intensively with a French company, Henri Poulenc, which was at the same time posing a big threat to the viability of the steel rings PWI is producing. . PWI is confronted not only with a substitute product which is both cheap and durable. Compared to PWI’s steel rings, the plastic rings being produced by Henri Poulenc is both cheaper and lasts longer. PWI is also facing the risk of earning the ire of its customers if it manufactures but selectively introduces the cheaper plastic rings in areas where it is faced with the ‘plastic’ competition. As a result, PWI is now confronted with a dilemma of differences in strategic measures to undertake given the differing opinions of its key people. Questions Posted for this Note: 1. You have to analyze the existing data, the conflicting views of the sales manager and the Development engineer. And make a decision as to whether PWI should begin the manufacture of a plastic ring. Answer: From the standpoint of the qualitative aspect of competition, PWI is encouraged to start...
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...manufacture and even many times usable and durable, the key to people at Precision Worldwide must decide whether to match the competitor's product, when to do so, how to price or what sustainable competitive advantage it needs to adopt during the next strategic period, given that it holds a large inventory of its now inferior product. This issue concerns the steel and plastic rings which the company, Precision Worldwide, Inc. (PWI) is opting to produce as a matter of competing intensively with a French company, Henri Poulenc, which was at the same time posing a big threat to the viability of the steel rings PWI is producing. . PWI is confronted not only with a substitute product which is both cheap and durable. Compared to PWI’s steel rings, the plastic rings being produced by Henri Poulenc is both cheaper and lasts longer. PWI is also facing the risk of earning the ire of its customers if it manufactures but selectively introduces the cheaper plastic rings in areas where it is faced with the ‘plastic’ competition. As a result, PWI is now confronted with a dilemma of differences in strategic measures to undertake given the differing opinions of its key people. Questions Posted for this Note: 1. You have to analyze the existing data, the conflicting views of the sales manager and the Development engineer. And make a decision as to whether PWI should begin the manufacture of a plastic ring. Answer: From the standpoint of the qualitative aspect of competition, PWI is encouraged to start...
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...Thorr Motorcycles, Inc. The Situation Image like success comes at a high price. Thorr Motorcycles, Inc. is currently at a crossroad. This is because there is a decline in the sale of its high-end motorcycle, the CruiserThorr. The current lifestyle image the CruiserThorr portrays, speaks to the more mature and settled consumer. These aging bases of customers who have the purchasing power are no longer buying new motorcycles and equipment. On the other hand, the younger generations of cyclist are not attracted to this brand, as they simply cannot afford to buy it. It is the task of the marketing team to resolve this issue by putting together a strategic plan that will allow Thorr Motorcycles, Inc. to maintain its reputation as a quality and reliable brand of transportation. The experts (marketing team) will also determine whether the company will reposition the current CruiserThorr versus creating a new product that will appeal to a different market segment and capture an audience of potential buyers. Thorr Motorcycles, Inc.’s ultimate goal is to regain the market share and competitive advantage over competing brands. Steps to Take Thorr Motorcycles, Inc. will remain solvent in the industry once it positions itself to compete with its competitors. Staring and comparing the attributes of the CruiserThorr against that of other motorcycle manufacturers can accomplish this. There are various fundamental parameters relevant to the industry and mirror what is best for Thorr...
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... Abstract Economics is a daily part of our lives I will be discussing how certain areas of economics affects my life these will include principles 2, 4 and 5of economics. I will discuss how supply and demand and consumer surplus are used in most areas of my life. My Economics class has given me a better understanding of how important economics is to our daily lives. How Economics is used in my daily life There are 10 principles of economics and all of them are used in our lives but for the purpose of this paper I will be discussing how three are used in mine. Principle 2- Opportunity cost “Because people face trade-offs, making decisions requires comparing the costs and benefits of alternative courses of action.” (Cleverley, Song, & Cleverley, 2011) This principle refers to what you have to give up in order getting what you want. For example, you can choose to study for an exam or be with family and friends. If you choose to study, your opportunity cost is quality time with family and friends. Opportunity costs do not always have a monetary value associated with them, rather, the cost is: anything of value to the person assessing the situation including energy and time. I have chosen to spend three years of my live to go to college for my Bachelors degree. This is costing me time with family and money. Will it be worth the opportunity cost? I believe it will...
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...POLICY Introduction The fastest and most effective way for a company to realize its maximum profit is to get its pricing right. The right price can boost profit faster than increasing volume will; the wrong price can shrink it Just as quickly. Yet many otherwise tough-minded managers shy away from initiatives to improve price for fear that they will alienate or lose customers. Consider the example of JCPenney stores for Queen sized mattress. The list price is $1699 and after giving away all discounts, the pocket price comes down to $630. Price realization is about decreasing price leakage, increasing pocket price and hence keeping a higher proportion of the list price that adds to the bottom line (profit). The leverage and payoff of improved pricing are high. Compare, for example, the profit implications of a 1 % increase in volume and a 1 % increase in price. For a company with average economics, improving unit volume by 1% yields a 3.3% increase in operating profit, assuming no decrease in price. On the other hand, 1% improvement in price, assuming no loss of volume, increases operating profit by 11.1 %. Improvements in price typically have three to four times the effect on profitability as proportionate increases in volume. Reverse also applies in this case: a mere 1 % price decrease for an average company, for instance, would destroy 11.1 % of the company's operating profit dollars. Effective transaction...
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...should consider action targeted at cost reduction (changes in flow controllers design or in their production and delivery process) or raising the price of flow controllers for customers. Since flow controllers are customized, the company can set different prices for different customers (groups of customers) based on the actual amount of resources spent (e.g. implement activity-based pricing). Problem Wilkerson has to estimate the profitability of its products in order to make long-term product mix decisions. These decisions should be based on estimation of product costs and might include decisions to continue / stop production of a particular product, pricing decisions, and decisions concerning product and process design, including customer relations. Information Information about direct labor and material costs as well as overhead costs is available. Overheads are recorded by five cost pools (machining, setup labor, receiving and production control, engineering, and packaging and shipment). We assume that the current month is typical in terms of (a) capacity utilization, and (b) cost of resources. Analysis Competitive situation The competitive situation varies for Wilkerson’s products. Pump and flow controllers are on the opposite sides of the spectrum. Pumps are commodity products, produced in high volumes for a market with severe price competition. Flow controllers, on the contrary, are customized...
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...business, because the loss would be equal to the total fixed cost and more in running the business. 2.On a recent trip to Chicago I had an opportunity to eat at the Berghoff Café. This famous restaurant was founded in 1898 by Herman Joseph Berghoff and was still run by the Berghoff family. We entered the restaurant at 3:10 P.M. were escorted to a table and presented with a menu which said, "Saturday Luncheon Menu." Apparently dinner begins at 4:00 P.M. at the Berghoff. Thinking that the prices were lower than I had remembered for past dinners at the Berghoff, I requested a Saturday dinner menu and compared some prices with the following result. The luncheon menu had prices for Sauerbraten, Weiner $chnitzel, and Johannisberg Riesling by the glass with the following prices respectively $11.75, $12.50, and 5.25. The dinner menu had the same items for $12.95, $13.95 and $5.50 respectively. Assuming that the service, food, portions etc. are the same at lunch and dinner, how can you explain the price difference between the lunch and dinner menus? (Since this question was originally written, The...
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...elements: 1. Product - The product is the physical product or service offered to the customer. In the case of physical products, it also refers to any services or conveniences that are part of the offering. Product decisions include aspects such as function, appearance, packaging, service, warranty, etc. 2. Price – pricing decisions should take into account profit margins and the probable pricing response of competitors. Pricing includes not only the list price, but also discounts, financing, and other options such as leasing. 3. Place – place decisions are those associated with channels of distribution that serve as the means for the product to the target customers. The distribution system performs transactional, logistical, and facilitating functions. Distribution decisions include market coverage, channel member selection, logistics, and levels of service. 4. Promotion – promotion decisions are those related to communicating and selling to potential consumers. Since these costs can be large in proportion to the product price, a break-even analysis should be performed when making promotion decisions. It is useful to know the value of a customer in order to determine whether additional customers are worth the cost acquiring them. Promotion decisions involve advertising, public relations, media types, etc. Getting the mix of these elements right enables the organization to meet its marketing objectives and to satisfy the requirements of customers. In addition to...
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...Access Pricing Principles — Telecommunications July 1997 Preface Part XIC of the Trade Practices Amendment (Telecommunications) Act 1997 introduces a new regime governing access to services in the telecommunications industry. A key component of this regime is the pricing of access which, in part, is to be administered by the Australian Competition and Consumer Commission. The purpose of this document is to outline the approach the Commission will adopt, in the usual case, when considering access pricing issues under Part XIC. A draft of this document was released for public comment in February 1997 and a public forum was held in April 1997. The Commission wishes to thank all parties who made submissions or participated in the public forum. This document reflects the Commission’s views after consideration of all relevant submissions and representations. The Commission also wishes to thank AUSTEL, Treasury, the Department of Communications and the Arts and the Bureau of Transport and Communications Economics for their assistance in preparing this document. The views expressed in this document are those of the Commission. ii Contents Preface ............................................................................................................................ ii Introduction ....................................................................................................................1 Legislative criteria ..................................................
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...Consider eliminating other services such as passport and Post Office Box (POB) and any other non mail processing and delivery services Use the above information to develop a framework for a recommendation for the USPS to continue or discontinue two of the services above. Your discussion should consider a make or buy decision or product line discontinuation decision or outsourcing decision or any combination with identification of the relevant costs to be considered. Your response should outline the quantitative factors such as relevant/avoidable/differential costs as well as the qualitative factors that should be considered in your decision. Provide an opinion assuming you had the appropriate information on what the USPS should do regarding future services. We examine points “a” and “d.” Both these are product elimination decisions. In making the decision, we need to consider the loss of revenue and the savings in cost. The loss of revenue would come from discontinuing the service and the savings in cost would be due to lower activity. In looking at the cost savings, we need to identify the relevant costs. The relevant costs are those costs which change with the decision. Therefore, if savings in costs exceed the loss of revenue, we would...
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...Q1.) Based on the 2004 statement of profit and loss data (Exhibits 1 and 2), do you agree with Waters’ decision to keep product 103? Analysis of product one reveals that based on variable cost, product 103 generates contribution of $13.726 million. Moreover, the avoidable fixed cost of producing product 103 is $8.793 million that is general administrative cost, selling cost and indirect labor cost. Therefore, product 103 generates net contribution of $4.933 million through sales of 986,974 units of product 103 during the year 2004. However, rest of the cost associated with product 103 is fixed cost and Super Manufacturing Company will have to bear this fixed cost regardless of its decision to produce product 103 or not. Currently, product 103 incurs net loss of $2.209 million, and if Super Manufacturing Company decides not to produce product 103, then it will incur additional loss of $2.671 million through net contribution lost by product 103. However, if product 103 is dropped then it will increase the net loss of Super Manufacturing Company to $3.359 million. Hence, Waters’ decision to keep the product 103 and use its contributions to cover the fixed cost is a good decision. Q2.) Should Superior Manufacturing Company lower as of January 1, 2006 its price of product 101? What will be the new price of product 101? The fixed and variable cost structure of product 101 shows that 54% of its standard cost is fixed and 46% is variable. However, a decrease in product 101 sales units...
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