Your initial discussion thread is due on Day 3 (Thursday) and you have until Day 7 (Monday) to respond to your classmates. Your grade will reflect both the quality of your initial post and the depth of your responses. Refer to the Discussion Forum Grading Rubric under the Settings icon above for guidance on how your discussion will be evaluated.

Pricing Decisions and Markup on Variable Costs [WLOs: 1, 2, 3] [CLOs: 1, 2, 3, 4, 5]

Prior to beginning work on this discussion, go to American Airlines(Links to an external site.)' and Samsung Electronics(Links to an external site.)' most recent annual reports by clicking on the "Investor Relations" link found at each company's website. The companies and their Internet addresses are listed below.

Company Name	Website	Product
American Airlines Group Inc. (AAL)	http://www.aa.com(Links to an external site.)	Airline tickets
Samsung Electronics Co., Ltd. (SSNLF)	https://www.samsung.com/us/(Links to an external site.)	Electronics

American Airlines and Samsung are offering their products and services like many other companies over the internet. In an initial post of at least 200 words use the most recent annual filings forAmerican Airlines andSamsung Electronics in Form 10-K to answer the questions below:

• Determine the following for each company:
  • A product description
  • A product price
  • A list of costs that are required to produce and sell the product selected in the product description as listed in the annual report on SEC Form 10-K
  • Whether the costs identified above are fixed costs or variable costs.
• Which of the products do you believe has the largest markup on variable cost?
• While Samsung is a hugely popular brand, holding its shares has never been easy for U.S. investors. How can an investor buy Samsung stock in the US?

Guided Response: Review several of your peers' posts. In a post of at least 100 words, respond to at least two of your peers' posts in a substantive manner. Provide information that they may have missed or may not have considered in regard to why variable-cost pricing can trick managers into setting prices so low that they hurt profits, or worse yet, cause net losses since it does not fully account for fixed costs. Do you agree with your peers' findings? Why or why not?

*Only need responses to the following explanations:

(1)

Good afternoon everyone:

After reviewing the 10-k-annual reports for both companies, it is fascinating how they can keep their variable costs pretty constant. For American Airlines, the prices can vary based on oil prices, demand of travel by customers, and economy, to name a few; American Airlines I tend to believe are true are: 1. Product description- they provide air travel at affordable rates to customers throughout the country. 2. product price- This will depend between destinations, time travel, seating, and the number of passengers. 3. Costs of the variable variety include airplane fuel, selling prices for different destinations, and what class seating they are sold. 4. Costs incurred of the fixed variety include wages paid (Including benefits) and fees associated with everyday activities, monthly maintenance on the aircraft, rent spaces for the airport restaurants, and some gift shops among those.

Looking at Samsung, I could see the following: 1. Product description- their products are highly diverse and range from DVR machines to 75 inches TVs. It is hard to pick out just one product to choose from. 2. Product Price- This would depend on the chosen product. It can also range from a $30 cellphone and service to at least $3500 for a big screen tv. 3. Variable cots might include the foreign trade marker, acquisition costs, and of course, the market volatility. And Fixed costs would again be wages for employees and paying back debt from long-term loans.

I think that Samsung would have a higher markup on its variable costs simply because the market is so volatile. Being first to the market with new Ip or a new product, they can mark up the prices when the product is in mass demand. As far as how someone can purchase Samsung stocks on the internet, " Investors can either buy shares directly in the Korean stock market after proper paperwork or through a local securities firm or bank (Merrill Lynch, Pierce, Fenner & Smith Inc. are eligible) ( Bajpai, n.d.).

(2)

American Airlines

American Airlines is one of the leading airlines in the world. According to their website, American Airlines does close to 6700 flights per day all over the world. They can be found in many of the larger airports. American Airlines have many different prices on flights depending on where you are traveling too around the world. I think the prices are affected by the following, fuel to get from point A to point B or C, paying for building or space in the airport, and the workers. I think it is a little of both. Price of the tickets can be affected depending on if fuel prices increase or decrease. Also, if they have to hire more workers to run the building and lights.

Samsung

Samsung is one of the world's largest electronics producers and distributors. Some of their products include cell phones, TVs, Washer/dryer, and many more. When thinking about cost, we have to look at materials needed, space needed to produce the products, and manpower or machine power. Again, to me, it would be variable cost. This is because if the prices of materials or anything else change, it can either increase or decrease the price of the products that are sold.

I believe that American Airlines has the largest markup on variable cost. You can purchase Samsung stock through the Korean Stock Exchange. With this, you have to buy a Korean brokerage account.