You've just been hired by Wilson Sporting Goods to develop a new pricing strategy for their softball$/$baseball gloves. You've been told that variable manufacturing costs for this year have been $$335,000,$ while fixed manufacturing costs have been $$245,000.$ Additionally, the company has spent $$55,000$ this year on variable selling and administrative costs and $$365,000$ on fixed selling and administrative costs. Each glove costs $$145$ of variable manufacturing costs and $$105$ of fixed manufacturing costs to produce.

The company reported earnings this year of $$200,000,$ which was short of the company's goal of $$250,000.$ They expect you to find a way to meet their $$250,000$ earnings goal with your new pricing strategy.

 

 

Required:

a$)$ What would be the standard markup percentage for a full cost pricing strategy? What would the price of the glove be$?$ Round all interim calculations to two decimal places.

b$)$ What would be the standard markup percentage for a variable cost pricing strategy? What would the price of the glove be$?$ Round all interim calculations to two decimal places.

Answer rating: 100% (QA)

a For a fullcost pricing strategy the price of the glove would include both variable and fixed costs ... View the full answer