Determine the best price point (that is, what is the best price to charge to maximize...

  

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Determine the best price point (that is, what is the best price to charge to maximize profits). At what price point will the contribution be maximum? Is that the same point as Max profits? Why is this pricing approach likely to be more realistic for a marketer? Justify. Does this approach take into account competitor pricing? Justify your response If the price is set at: $60 $50 $40 $30 $20 Then unit sales are likely to be: 500 1,000 1,500 2,000 2,500 Total Revenue Allocated Fixed Costs $10,000 $10,000 $10,000 $10,000 $10,000 Variable Total Cost/Unit Production Cost $10 $10 $10 $10 $10 Gross Contribution (Gross Profit/ Gross Margin) Net Profit Determine the best price point (that is, what is the best price to charge to maximize profits). At what price point will the contribution be maximum? Is that the same point as Max profits? Why is this pricing approach likely to be more realistic for a marketer? Justify. Does this approach take into account competitor pricing? Justify your response If the price is set at: $60 $50 $40 $30 $20 Then unit sales are likely to be: 500 1,000 1,500 2,000 2,500 Total Revenue Allocated Fixed Costs $10,000 $10,000 $10,000 $10,000 $10,000 Variable Total Cost/Unit Production Cost $10 $10 $10 $10 $10 Gross Contribution (Gross Profit/ Gross Margin) Net Profit

Answer rating: 100% (QA)

To determine the best price point that maximizes profits we need to analyze the contribution margin at different price levels The contribution margin is calculated by subtracting the variable cost per ... View the full answer