To produce posters in the store requires a capital investment of $21000. In addition, there are fixed costs annually of $7000. Consumers in the Ghent area pay as much as $10 for posters sold at the Chrysler Museum Gift Shop and the ODU Bookstore. Kinko's at Military Crossing will print a similar size poster for $6.00 each. The variable cost to produce a poster is $3.00. What price would you set for this product and why? What pricing strategy would this represent? Whal would be your breakeven volume? If you wanted a 10% returm on investment at the price you selected, what would be your wolume needed? If there are 30000 potential customers, what market share would you need, given your need for a 10% stum? Does this seem to be a good opportunity and why?

To produce posters in the store requires a capital investment of $21000. In addition, there are fixed costs annually of $7000. Consumers in the Ghent area pay as much as $10 for posters sold at the Chrysler Museum Gift Shop and the ODU Bookstore. Kinko's at Military Crossing will print a similar size poster for $6.00 each. The variable cost to produce a poster is $3.00. What price would you set for this product and why? What pricing strategy would this represent? Whal would be your breakeven volume? If you wanted a 10% returm on investment at the price you selected, what would be your wolume needed? If there are 30000 potential customers, what market share would you need, given your need for a 10% stum? Does this seem to be a good opportunity and why?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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