See-Clear Optics is considering producing a new line ofeyewear. Aft er considering the costs of raw materials and the costof some new equipment, the company estimates fi xed costs to be$40,000 with a variable cost of $45 per unit produced.(a) If the selling price of each new product is set at $100, howmany units need to be produced and sold to break even?Use both the graphical and algebraic approaches.(b) If the selling price of the product is set at $80 per unit,See-Clear expects to sell 2000 units. What would be thetotal contribution to profi t from this product at thisprice?(c) See-Clear estimates that if it off ers the product at theoriginal target price of $100 per unit, the company willsell about 1500 units. Will the pricing strategy of $100per unit or $80 per unit yield a higher contribution toprofi t?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
See-Clear Optics is considering producing a new line of
eyewear. Aft er considering the costs of raw materials and the cost
of some new equipment, the company estimates fi xed costs to be
$40,000 with a variable cost of $45 per unit produced.
(a) If the selling price of each new product is set at $100, how
many units need to be produced and sold to break even?
Use both the graphical and algebraic approaches.
(b) If the selling price of the product is set at $80 per unit,
See-Clear expects to sell 2000 units. What would be the
total contribution to profi t from this product at this
price?
(c) See-Clear estimates that if it off ers the product at the
original target price of $100 per unit, the company will
sell about 1500 units. Will the pricing strategy of $100
per unit or $80 per unit yield a higher contribution to
profi t?
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