Detroit Bikes find they face price elasticity of demand for their fat tire Commuter model of -1. 5 for on-line catalog sales and -1.25 for physical shopping experiences at their bike shop retail partners. Delivery costs to Detroit Bike for freight shipping direct to the on-line customer = $50. The retail partners receive an assembly fee (allocated cost $40) as part of their shelf-in allowance contract with Detroit. The direct costs of goods sold include: component inputs = $120 and manufacturing labor (salaried) = $30. What will be the optimal price, dollar contribution margin, percentage mark-up, and % margin of the Commuter in its two distribution channels.

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For online channel P 600 contribution ma... View the full answer