Cost-Plus Pricing StrategyProduct Details:Product A:Variable Costs: $60,000Fixed Costs: $40,000Desired Profit Margin: 30%Product B:Variable Costs: $80,000Fixed...
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Accounting
Cost-Plus Pricing Strategy
Product Details:
- Product A:
- Variable Costs: $60,000
- Fixed Costs: $40,000
- Desired Profit Margin: 30%
- Product B:
- Variable Costs: $80,000
- Fixed Costs: $50,000
- Desired Profit Margin: 25%
Requirements:
- Calculate the cost-plus price per unit for Product A and Product B.
- Determine the total price for each product based on the desired profit margin.
- Present the calculations in a detailed table format.
- Discuss how the cost-plus pricing strategy can affect market competitiveness.
- Analyze the sensitivity of the pricing strategy to changes in cost structure.
- Evaluate the long-term strategic benefits of cost-plus pricing for the company.
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