BA252: Pricing Analysis
Assignment Part 1 (20 points)
For Part 1, you will define and describe the 5 terms listed below. In order to successfully
respond to this part of the assignment, you will need to expand beyond the textbook
definitions by providing examples and applying these terms in a manner that illustrates
their importance in the world of marketing/business.
• Break-even Analysis
• Gross Margin Ratio
• Return on Investment (ROI)
• Inventory Turnover Rate
• Market Penetration Pricing Strategy
Part 2 (30 points)
For Part 2, complete the work below. Consult Chapter 10 and the Marketing Math
Appendix in the textbook, along with the Week 7 readings and course materials.
Note: You must show your work, or it will not count.
Many resellers and retailers discuss their markup not in terms of Markup-on-Cost, but as
a reflection of price. That is, the markup is viewed as a percentage of the selling price
and not as a percentage of cost, as it is with the Markup-on-Cost method.
Determine the following:
1. A clothing store is selling a suit with a $250 markup, which requires a $950 selling
price. What is markup percentage based on selling price?
2. Company XYZ is trying to price their shoes based upon selling price. This company’s
cost per pair of shoes is $110 each, and their markup-on-selling price percentage is 40%.
What is the Selling Price for one pair of shoes?
Next, you have been asked by your manager to craft an update on the company’s sales
and fulfilment performance of your flagship product. Here is the breakdown of how your
accounting department allocated the costs for the flagship product:
• Packing: $7.00 per sale
• UPS (fulfilment charge) charge per sale: $12.00 per sale
• Sales Commission: $10.00 per sale
• Flagship Units: $50.00 Cost of each
(Continued to the next page)
• Rent: $130,000 per year
• Overhead: $850,000
• $187.00 per unit
Answer the following:
1. What is the contribution margin per unit for the flagship product?
2. What is the Break-Even Volume in Units for the flagship product?
3. What is the Break-Even in dollars for the flagship product?
4. What would be the net profit if you sold 32,000 units of the flagship product?