Pricing Problem Review (For Marketing)

1. Assume you are the owner of ABC Fitness and you are going to use cost-plus pricing to determine membership fees for your next fiscal year. You carefully estimate your total costs to operate your facility for one year to be $400,000 for a membership of 1000 people. If you want a profit margin of $150,000, what will you need to charge for an annual membership fee per person?

2. Assume you own a hat company. The fixed cost (FC) of producing the Free State Hat is $100,000 and the variable cost (VC) is $12 per hat. The total cost (TC) of producing 4,000 hats is:

3. Using the same FC and VC as in the above problem what would be the break-even price for producing 5,000 hats?

4. If the price of a ticket increases from $6 to $8 (33%) and the average attendance decreases from 6,200 to 6,000 (3.2%) this indicates

5. If the price of a ticket increases from $6 to $8 (33%) and the average attendance decreases from 12,000 to 6,000 (50%) this indicates

Answer rating: 100% (QA)

1 To determine the membership fee per person using costplus pricing we need to add the desired profi... View the full answer