SOLUTION TO POLO GOLF SHIRT PRICING CAS

SOLUTION TO POLO GOLF SHIRT PRICING CASE EXERCISE

Quantity
Sold
Uniform Price
Total Revenue
Marginal Revenue
Variable Cost
0
$50
$0
$0
$28
1
$48
$48
$48
$28
2
$46
$92
$44
$28
3
$45
$135
$43
$28
4
$44
$176
$41
$28
5
$42
$210
$34
$28
6
$40
$240
$30
$28
7
$38.29
$268
$28
$28
8
$36.50
$292
$24
$28
9
$34.56
$311
$19
$28
10
$32.70
$327
$16
$28
11
$30.91
$340
$13
$28
12
$29.17
$350
$10
$28
13
$27.46
$357
$7
$28
14
$25.79
$361
$4
$28
15
$24.07
$361
$0
$28
16
$22.50
$360
-$1
$28
17
$20.94
$356
-$4
$28
18
$19.39
$349
-$7
$28
TABLE 1

Quantity
Sold
Uniform Price
Total Revenue
Marginal Revenue
Variable Cost
Total Variable Cost
Total
Profit Contribution
Incremental Profit Contribution
0
$50
$0
$0
$28
$0
$0
$0
1
$48
$48
$48
$28
$28
$20
$20
2
$46
$92
$44
$28
$56
$36
$16
3
$45
$135
$43
$28
$84
$51
$15
4
$44
$176
$41
$28
$112
$64
$13
5
$42
$210
$34
$28
$140
$70
$6
6
$40
$240
$30
$28
$168
$72
$2
7
$38.29
$268
$28
$28
$196
$72
$0
8
$36.50
$292
$24
$28
$224
$68
($4)
9
$34.56
$311
$19
$28
$252
$59
($10)
10
$32.70
$327
$16
$28
$280
$47
($12)
11
$30.91
$340
$13
$28
$308
$32
($15)
12
$29.17
$350
$10
$28
$336
$14
($18)
13
$27.46
$357
$7
$28
$364
($8)
($21)
14
$25.79
$361
$4
$28
$392
($32)
($24)
15
$24.07
$361
$0
$28
$420
($60)
($28)
16
$22.50
$360
-$1
$28
$448
($89)
($29)
17
$20.94
$356
-$4
$28
$476
($121)
($32)
18
$19.39
$349
-$7
$28
$504
($156)
($35)
TABLE 2

Total variable cost = Variable cost x quantity
Total profit contribution = Total revenue - total variable cost
Incremental profit contribution = change in total profit contribution
1. Identify the change in total revenue (marginal revenue) from the fourth shirt per day. What price reduction was necessary to sell four rather than three shirts?
The change in total revenue (marginal revenue) for the 4th shirt is $41. The necessary