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I need help with this worksheet and can not figure it out for the life of me, Im kind of in a rush can anyone help?
I need help with this worksheet and can not figure it out for the life of me, Im kind of in a rush can anyone help?
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?