Cougar Fabricators still has the same costs outlined in 1- Life Cycle Pricing but now wants to
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Question:
- Cougar Fabricators still has the same costs outlined in "1- Life Cycle Pricing" but now wants to determine the selling price using Target pricing. They have set the price at $75,000 per unit and require a minimum 30% return.
- 1a. Will the product meet their expectations for a 30% return?
- 1b. what is the exact return at a selling price of $75,000 per unit?
- 2. Cougar Fabricators wants to plan to give their employees a big bonus at the end of the 2-year cycle but needs to hit a 50% return in order to accomplish that goal;
- (2a) will the $75K target price allow them to hit this goal? Why/Why Not?
- (2b) what would be the target price with exactly a 50% return? Show your work and calculate everything within excel to see the formulas you use to come up with your answers.
- Note that “Return” refers to the percentage a company wants to be left over from the selling price after the company has factored in what it costs to make it. in other words Return % = (Selling price - Cost)/Cost.
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
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