Mktg6200 33900 Creating and Sustain Cust MarketsWeek 5 Pricing Assignment- Individual AssignmentBrian Burwell   2/4/2017MKTG6200 33900 Creating/Sustain Cust Markets SEC 04Handwritten answers will be accepted, but must be clear and legible.Show the step by step solutions to the following questions:A firm is able to sell 10,000 units at $ 12 per piece. The company fixed cost is $30,000. Variable cost is $6 per unit.What is the contribution per unit?CPU = SELLING PRICE (SP) – VARIABLE COST PER UNIT (VCPU)$12 – $6 = $6  What is the breakeven sales in $? What is the breakeven sale in units?BREAKEVEN SALES ($) = FIXED COST/CPU/SP$30,000 / ($6 / $12) OR $30,000 / 0.5 = $60,000BREAKEVEN SALES (IN UNITS) = FIXED COST/CPU $30,000 / $6 = 5,000 unitsWhat is the markup on sales price? What is the mark up on total cost?Sales = 10,000 * 12 or 120,000Cost =10000*6+30000 or 90,000Profit 120,000 – 90,000 or 30,000Markup on Sales Price = 30000/120000 or 25%
Markup on Costs = 30000/90000 or 33.33%They raise the price to $15 and demand drops to 8000.Calculate the price elasticity.Price elasticity = percentage change in quantity / percentage change in priceChange in price: 3/12 = .25Change in demand: 2000/10000 = .20Price elasticity: .20 / .25 = .80What is the new markup (profit margin %) on the sales price ($15)? What is the new mark up ( profit margin %)  on total cost?Sales: 8000 * 15 =  120,000Cost: 8000 * 6 + 30000 = 78,000Profit: 120,000 – 78,000 = 42,000Markup on sales 35%Markup on cost 53.85Please calculate the total profit for this company as well as the profit per each toy sold. Are they better off raising the price?Total Profit $42,00042,000/8000 = 5.25 per toyYes they are better off raising the price because profit increased by 12,000