Marketing by the Numbers Exercise Set One
Marketing by Numbers Exercise Set One
1.1 Sanborn, a manufacturer of electric roof vents, realizes a cost of $55 for every unit it produces. Its total fixed costs equal $2 million. If the company manufactures 500,000 units compute the following:
a) unit cost unit cost = variable cost + fixed cost/unit sales x = $55 + $2,000,000/500,000 = $59 unit cost
b) markup price if the company desires a 10% return on sales unit cost/(1 – desired return on sales) $59/(1 - .10) = $65.56
c) ROI price if the company desires a 25% return on an investment of $1 million ROI price = unit cost + ROI x investment/unit sales $55 + .25 x 1,000,000/500,000 = $55.5
1.2 An interior decorator purchases items to sell in her store. She purchases a lamp for $125 and sells it for $225, Determine the following:
a) dollar markup dollar markup = selling price – cost: $225-125 = $100
b) markup percentage on cost dollar markup/cost $100/$125 = 80%
c) markup percentage on selling price dollar markup/selling price $100/$225 = 44%
1.3 A consumer purchases a toaster from a retailer for $60. The retailer’s markup is 20%, and the wholesaler’s markup is 15%, both based on selling price. For what price does the manufacturer sell the product to the wholesaler?
Purchase price: $60
Retailer markup: 20%
Wholesale markup: 15%
Markup % on price = price – cost/price
Cost at each level = price – (price x markup %)
$60 – ($60 x .2) = $48, the price the whole seller sells at to the retailer
$48 – ($48 x .15) - $40.80, the price that the manufacturer sells at to the whole
1.1 Sanborn, a manufacturer of electric roof vents, realizes a cost of $55 for every unit it produces. Its total fixed costs equal $2 million. If the company manufactures 500,000 units compute the following:
a) unit cost unit cost = variable cost + fixed cost/unit sales x = $55 + $2,000,000/500,000 = $59 unit cost
b) markup price if the company desires a 10% return on sales unit cost/(1 – desired return on sales) $59/(1 - .10) = $65.56
c) ROI price if the company desires a 25% return on an investment of $1 million ROI price = unit cost + ROI x investment/unit sales $55 + .25 x 1,000,000/500,000 = $55.5
1.2 An interior decorator purchases items to sell in her store. She purchases a lamp for $125 and sells it for $225, Determine the following:
a) dollar markup dollar markup = selling price – cost: $225-125 = $100
b) markup percentage on cost dollar markup/cost $100/$125 = 80%
c) markup percentage on selling price dollar markup/selling price $100/$225 = 44%
1.3 A consumer purchases a toaster from a retailer for $60. The retailer’s markup is 20%, and the wholesaler’s markup is 15%, both based on selling price. For what price does the manufacturer sell the product to the wholesaler?
Purchase price: $60
Retailer markup: 20%
Wholesale markup: 15%
Markup % on price = price – cost/price
Cost at each level = price – (price x markup %)
$60 – ($60 x .2) = $48, the price the whole seller sells at to the retailer
$48 – ($48 x .15) - $40.80, the price that the manufacturer sells at to the whole