Based on WS#6B:

If anyone can help with this question, It's due in an hour and Im very confused, thank you!

Based on WS#6B: Janmar 20% Price Cut - Possible Retail Responses

Assume that the typical retail store has a GM of 40%:

Hence the following:

                       Initial             Price cut (1)       Price cut (2)      Price cut (3)

Retail            $100               $100$80$88

CGS               $60                $48$48$48

                                                   (Janmar SP)

$GM  (R)      $40                 $52$32$40

%GM (R)      40%               52% 40%45.5%

Given the above, answer the following: 

A.  Which of the above would you characterize as best representing a price cut "pass through"? Explain your reasoning.

B.  Assume that the store is selling 100 units a month at the "Initial Price" of $100. How many units would the store need to sell per month in each of the Price cut conditions above to maintain the $ revenue of the "Initial Price" condition? Show your logic.

1.  Price cut (1):

2.  Price cut (2):

3.  Price cut (3):

C. Again ssume that the store is selling 100 units a month at the "Initial Price" of $100. How many units would the store need to sell per month in each of the Price cut conditions above to maintain the $ gross margin of the "Initial Price" condition? Show your logic.

4.  Price cut (1):

5.  Price cut (2):

6.  Price cut (3):

D. Which of the 3 responses above would you recommend to a retail client? Carefully explain the basis for your decision. What additional information would you find useful, and why?