Pricing setting
Wire Solutions- case on page 633
Questions for the case- Please read the case and answer the questions below
(show all your work)
1. If wire solution took a 30% markup on the black shoe rack and a 35% markup on the chrome shoe rack what would the selling prices be for each?
2. In this scenario, Wal-Mart elected to purchase the shoe racks and they took a 40% markup on each shoe rack what would final customers (Wal-Mart consumers) pay for each shoe rack?
3. Since they are just starting the consumer division, Wire Solutions may decide to focus on just the chrome shoe rack because it appears to be a better quality product. Let’s assume a variable cost of $2.20 per chrome rack, and taking the current 35% markup to calculate selling price outlined in question #1, how many chrome shoe racks would they need to sell to break even?
4. If wire solution wanted the chrome shoe rack to sell for $9.99 in retail stores, what should they sell it to retailers for assuming the retailers will take 45% markup? Calculate wire Solution markup percentage based this selling price.
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