Answer:
Loss of 6300
Explanation:
Give the following :
Equipment - -- B/Val - - F/Value - - cash Received Equipment A - - 74,100 - - 81,600 - - 11,100 Equipment B - - 61,900 - - 55,600 - - 10,000
Book value of equipment B = 61,900
Loss / gain :
(Fair value - book value ) = (55,600 - 61,900)
Loss / gain = - 6,300
Loss = (6300)
A company decides to establish an EOQ for an item. The annual demand is 400,000 units, each costing $9, ordering costs are $35 per order, and inventory carrying costs are 22%. Calculate the following:
a. The EOQ in units
b. Number of orders per year.
c. Cost of ordering, cost of carrying inventory, and total cost
Answer and Explanation:
a. The computation of the economic order quantity is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
[tex]= \sqrt{\frac{2\times \text{400,000}\times \text{\$35}}{\text{\$1.98}}}[/tex]
= 3,761 units
b. The number of orders would be equal to
= Annual demand ÷ economic order quantity
= 400,000 ÷ 3,761 units
= 106.35 orders
c. The computation of the total cost is shown below:
= Purchase cost + ordering cost + carrying cost
where,
Purchase cost = Annual consumption × Cost per unit
= 400,000 × $9
= $2,800,000
Ordering cost = (Annual demand ÷ EOQ) × Cost to place one order
= (400,000 ÷ 3,761) × $35
= $3,723
Carrying cost = (EOQ ÷ 2) × carrying cost percentage × Cost per unit
= (3,761 ÷ 2) × 22% × $9
= $3,723
Now put these values to the above formula
So, the value would equal to
= $2,800,000 + $3,723 + $3,723
= $2,807,446
Answer:
c
Explanation:
At the end of the day, the cash register's record shows $1,252, but the count of cash in the cash register is $1,246. The correct entry to record the cash sales is:_______
a. Debit Cash $1,264; credit Cash Over and Short $1,252; credit Sales $12.
b. Debit Cash $1,252; debit Cash Over and Short $12; credit Sales $1,264.
c. Debit Cash Over and Short $12, credit Sales $12.
d. Debit Cash $1,252; Credit Sales $1,252.
e. Debit Cash $1,264; credit Sales $1,264.
Answer:
Debit cash $1,246
Dr Cash over short $6
Credit sales $1,252
Explanation:
Based on the information we were told that
the cash register's record shows the amount of $1,252 while the count of cash of the cash register was the amount of $1,246 which means that correct entry to record the cash sales is:
Debit cash $1,246
Dr Cash over short $6
($1,252-$1,246)
Credit sales $1,252
Several firms are operating in a market where they take the other firms' response to their actions into account. This market is
Answer: An Oligopolistic market.
Explanation:
An Oligopolistic market is a market where they are very few supplies of a product and as such they charge higher prices due to the reduced competition.
In such a market the firms have to be very mindful of how their actions will impact that of their competitors because with such few competitors, they could easily lose customers if another oligopoly decides to change prices for instance.
They generally avoid doing so though because a price change by one will lead to a price change by others which would end up reducing the total amount that each firm makes as the prices will usually go downwards not up unless they collude.
Summarize the impact of foreign exchange rates on the company’s financial statements. What risks do foreign exchange rates pose? Provide academically supported example(s) in your response
Answer with Explanation:
Foreign exchange rates can have significant impact on the company's financial statements because the spot rate at that date can be affect the value of the company's assets. It is very common in consolidated financial statement of a multinational companies.
The impact on the financial statements can be as under:
The fluctuation in currency value can under or over statement of assets. liabilities and Income & Expenses.The fluctuation makes the analysis of the financial statements meaningless. The performance of the company in a consolidated statement will be in a state that would not be better understood or time consuming by experts to develop understanding of what the financial statement is saying. It would be difficult for an ordinary person to understand the performance of the business.It can also also manipulate the value of the assets of the company because increase in devaluation of the currency means increase in inflation and vice versa.The value of the company acquired can be affected significantly which means that the investment (value of whole company) can turn into significant losses which means it can result reporting losses of in a consolidated financial statement. This would also result in decrease in the stock value of the group as a whole.When valuing a preferred stock, the type of security that we treat the preferred stock like, for valuation purposes, is
Answer:
Perpetuity.
Explanation:
This is explained to be a type of annuity which is seen to be in position of receiving infinite amount of payments periodically. It is also tagged to be a financial instrument that is seen to pay consistently but periodically. In our world today, it is put to be the present value of a stream of cash that goes on, into the future, forever. In as much as cash payments are infinite, it’s possible to calculate their present total value because the value of each payment incrementally decreases with each year to the point that it approximates zero. Research has shown that in a lot of cases, economic analysts are seen to use this calculation to determine the value of stocks that pay fixed dividends, real estate that earns rent and annuity insurance products.
When a commercial bank borrows additional reserves from another bank, it pays which interest rate?
Answer:
Federal funds rate
Explanation:
Federal funds rate can be described as a target interest rate which is set by the Federal Open Market Committee (FOMC) and it is the interest rate at which excess reserves of commercial banks are lent to and borrowed from each other overnight.
The law requires that commercial banks must maintain certain percentage of their deposits in their account with Federal Reserve bank as a reserve. When there is an excess of money above the required level in the reserve of some banks, the excess can be lent by those banks to other banks that have shortfalls. The interest rate that is paid by the borrowing banks is the federal fund rate.
Answer - Federal Funds Rate
Explanation;
The Fed sets a reserve requirement that banks must keep with them out of their deposits. Everyday they will have to meet this reserve requirement. When they do not, they have the option to borrow overnight from another bank that has excess reserves.
The rate that they will borrow these excess reserves at is the Federal Funds Rate. This rate is set by the Federal Open Market Committee (FOMC) of the Fed which does so based on the economic condition of the nation.
Which of the following individuals and groups are considered intermediaries in the healthcare industry?
A. government provided Medicare and Medicaid
B. home healthcare providers
C. health maintenance organizations
D. pharmaceutical companies
E. insurance companies
F. professional doctors' associations
Answer:
C. health maintenance organizations
Explanation:
Healthcare intermediaries organizations that form links between small-scale providers to interact with governments, patients and vendors. These organizations can perform key health systems functions which are typically more challenging for individual private providers to do on their own. An individual pays the health maintenance organisation in advance for medical care that he may require in the future and the organisation provides medical care to the individual when the need arises. These organisations are able to provide this care by paying doctors affiliated to them, and other healthcare providers who deliver care to the patients
Midwest Sales, Inc. has a stated written policy by which all similarly situated employees are to be paid the same salary. John Doe (a male), a Senior Executive Vice President for Sales and Marketing for Midwest’s ZONE A, is paid $100,000 a year by Midwest. Jane Roe (a female), a Senior Executive Vice President for Sales and Marketing for Midwest’s ZONE B, is paid $95,000 a year by Midwest. Jane has worked for Midwest two years longer than John. The description of John and Jane’s respective jobs are identical. What is most accurate statement concerning any legal challenge to the differential is pay between what Midwest pays John and Jane?a) The pay difference is not unlawful and cannot be challenged because there is less than a 10% pay difference between what Midwest pays John and Jane.b) The pay difference is unlawful, unless Midwest can establish some significant difference between Zone A and Zone B.c) The pay difference is not unlawful and cannot be challenged in this instance because the "seniority" defense allows for different pay for men and women even though they may be performing "substantially the same job".d) The pay difference is unlawful, not because of the gender difference between John and Jane, but because Midwest is violating its own stated pay policy.
Answer:
b) The pay difference is unlawful, unless Midwest can establish some significant difference between Zone A and Zone B.
Explanation:
The equal Pay Act of 1963 states that men and women should earn the same salary for similar jobs, i.e. there should be no distinction of gender when establishing a person's salary.
The exception to this rule would be that the work carried out in Zone A is much more demanding, challenging, difficult, important or relevant than the work carried out in Zone B. E.g. Zone A represents 75% of total revenue, or includes very large cities.
Athena Company provides employee health insurance that costs $15,500 per month. In addition, the company contributes an amount equal to 3% of the employees' $155,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:_________.
Debit to Payroll Taxes Expense $20,150.
Debit to Employee Retirement Program Payable $4650.
Credit to Employee Benefits Expense $15,500.
Debit to Medical Insurance Payable $15,500.
Debit to Employee Benefits Expense $20,150.
Answer: Debit to Employee Benefits Expense $20,150
Explanation:
Amount that company gives to employees as benefits;
= Health insurance + Retirement contribution
= 15,500 + ( 3% * 155,000)
= 15,500 + 4,650
= $20,150
As this is an expense, it will be debited to the relevant expense account being the Employee Benefits expense account.
♡
Which of the following does not represent a copyright?
O a photograph
o a sketched floor plan
O painting by the numbers
o choreographing a dance step by step
Answer:
I think the answer is a sketched floor plan
Answer:
d- because you are teaching it but you dont have full ownership of it because it is a dance that you can learn
Instructions: Please answer questions A-D below. I can't award credit if A-D isn't answered completely.
Primus Corp. is planning to convert an existing warehouse into a new plant that will increase its production capacity by 45 percent. The cost of this project will be $7,125,000. It will result in additional cash flows of $1,875,000 for the next eight years. The company uses a discount rate of 12 percent.
A. What is the payback period?
B. What is the NPV for this project ?
C. What is the IRR?
D. Based on the results give a suggestion to Primas Corp?
Answer:
A, 3.8 years
b NPV = $2,189,324.56
c. IRR = 20.33%
d. Primas Corp can carry out the conversion because it would be profitable all other things being equal
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = amount invested / cash flow = $7,125,000 / $1,875,000 = 3.8 years
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
NPV and IRR can be calculated using a financial calculator
Cash flow in year 0 = $-7,125,000
Cash flow each year from year 1 to 8 = $1,875,000
I = 12%
NPV = $2,189,324.56
IRR = 20.33%
D.the NPV is positive and the IRR exceeds the discount rate so the project is profitable and the company should undertake the project
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
You recently purchased a stock that is expected to earn 20 percent in a booming economy, 15 percent in a normal economy, and lose 2 percent in a recessionary economy. There is 21 percent probability of a boom, 72 percent chance of a normal economy, and 7 percent chance of a recession. What is your expected rate of return on this stock
Answer:
Expected rate of return on stock is 14.86%
Explanation:
The expected rate of return of a stock is the mean return that is expected to be earned by the stock considering the different scenarios that can occur, the return in these scenarios and the probability of the occurrence of these scenarios. The formula for expected rate of return of stock is,
rE = pA * rA + pB * rB + ... + pN * rN
Where,
pA, pB, ... represents the probability that scenario A, B and so on will occur or the probability of each scenario rA, rB, ... represents the return in scenario A, B and so on
rE = 0.21 * 0.2 + 0.72 * 0.15 + 0.07 * -0.02
rE = 0.1486 or 14.86%
This year Nathan transferred $1 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next 5 years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used all unified credit. What is the amount of gift tax, if any, must Nathan remit in 2017? Ignore the annual exception amount of $15,000.
A) 159,500
B) 155,800
C) 155,450
D) Zero- there is a $10 Million exemption equivalent
Answer:
Zero- there is a $10 Million exemption equivalent ( d )
Explanation:
Annual exemption to be ignored = $15000
$1 million to an irrevocable trust
taxable gifts = $6 million
A) The amount of gift tax Nathan must remit in 2017 ignoring annual exemption
The gift tax must remit in 2017 is zero because there is a $10 million exemption because of the annual exception ( even if the annual exception is ignored ) and the lifetime benefits on taxable gifts that Nathan has is approximately $11.4 million, hence he wont be remitting any amount on gift tax in 2017
An increase in a bond's yield to maturity results in a price decline that is ________ the price increase resulting from a decrease in yield of equal magnitude.
An increase in a bond's yield to maturity results in a price decline that is smaller than the price increase resulting from a decrease in the yield of equal magnitude.
What is the meaning of Bond?A bond is a borrower's guarantee to pay a creditor their principal amount plus, typically, interest on the loan. Governments, local governments, and businesses all issue bonds.
An IOU-like debt security is called a bond. Borrowers create bonds to get money from investors who are willing to lend to them for a set length of time. When you purchase a bond, you are making a loan to the issuer, which could be a corporate, government, or municipal entity.
Savings bonds, agency bonds, municipal bonds, corporate bonds, and treasuries are some examples of bonds. Treasury bonds, which are the safest but have the lowest interest rates, are typically sold at auction.
The category of investments known simply as "fixed-income securities" includes bonds. Because they are debt obligations, the investor lends a specific sum of money (the principal) to an organization or government for a defined period in exchange for a time recorded of interest payments (the yield).
Learn more about the bond here:
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Describe briefly what an automatic identification system (AIS) is and how service organization could use AIS to increase productivity and at the same time increase the variety of services offered. Please give specific real world examples.
Answer:
An automatic identification system (AIS) is an automated tracking device fitted to a vehicle or vessel to display objects around the vicinity of the vessel on a screen. This helps the driver of a vehicle, for instance, to identify such objects and know how to afford head-on collisions. For a ship, the signal sent to the VT station helps in monitoring movements around the ship.
Explanation:
Most ships are fitted with AIS to enable Vessel Tracking services. The AIS also shows the other ships that are around and transmits the information to the Vessel Tracking Station (VTS). Some modern cars are fitted with AIS to help the driver to identify obstructive objects. The identified signal is displayed on the dashboard of the car just as the maritime AIS displays on the ship's dashboard as it also transmits to the VTS.
In reality, most decisions fall between: A. recurring and unstructured decisions. B. recurring and nonrecurring decisions. C. structured and unstructured decisions. D. structured and nonrecurring decisions.
Answer: C. structured and unstructured decisions
Explanation:
In reality, most decisions fall between structured and unstructured decisions. It should be noted that for an unstructured decision, the decision maker had to give an evaluation and judgement into the definition of the problem.
Structured decisions are typically repetitive and therefore the decision makers can just use a particular procedure to handle them.
If a firm's beta was calculated as 1.3 in a regression equation, a commonly used adjustment technique would provide an adjusted beta of Group of answer choices zero or less. between 0.3 and 0.9. less than 1.0 but greater than zero. greater than 1.3. between 1.0 and 1.3.
Answer: Between 1.0 and 1.3
Explanation:
The adjusted beta technique assumes that the beta of the security is moving towards the market beta overtime so it adjusts the security's beta by computing a weighted average of the security's beta and the market beta in the following manner;
Adjusted beta = (.67) * Security beta + (.33) * 1.0
= 0.67 * 1.3 + 0.33
= 1.2
What aspect of evaluating a supplier might be affected by meeting government standards?
A. Completeness of orders
B. Quality
C. Flexibility
D. Timeliness
Answer: Quality
Explanation:
The aspect of evaluating a supplier might be affected by meeting government standards us quality. Quality is the ability that a product has and out it stands out when compared to other similar products.
Government is always considered with the quality of a good or service in order to ensure that it's good for use and safe.
As a warm-up, here's a question that won't affect your score. We recommend you take this test in a quiet place free from distractions. The timer shows the time remaining for each question. The assessment will begin when you hit "Continue."Generally Accepted Accounting Principles (GAAP) are a) commonly agreed-upon professional accounting standards in the United States b) legally binding rules created by the Internal Revenue Service c) standards required only for large companies with over $100M in revenue
Answer:
a) commonly agreed-upon professional accounting standards in the United States
Explanation:
According to the Generally Accepted Accounting Principles (GAAP) it consist of accounting principles, rules, procedures that are followed companies to companies so that there financial statements considered to be valid.
Here, in the given question the option A is correct as it is agreed for the professional accounting standard that shows the Generally Accepted Accounting Principles (GAAP)
Hence, the correct option is A.
Subject matter experts often perform specific project activities when necessary. Which of the following statements accurately describes the role of subject matter experts in support of a project?
a. The subject matter experts are typically assigned to the project from start to finish.
b. The subject matter experts may not relate strongly with a project due to the temporary nature of their involvement.
c. Subject matter experts typically approve critical project decisions.
d. none of these
Answer:
b. The subject matter experts may not relate strongly with a project due to the temporary nature of their involvement.
Explanation:
A subject matter expert is a person that is considered to be an authority in a particular field or area. Because of their defined area of expertise they are only invited into a project to perform specific activities.
Due to the temporary nature of their roles in project they don't tend to have a buy-in to the project objectives.
If they were involved in various aspects of the project on a more permanent basis, they would have developed a commitment to see the project through to the end
The following information is from the December 31, 2017 balance sheet of Jackson Corporation
Preferred Stock, $100 par $260,000
Paid In Capital in Excess of Par - Preferred 14,000
Common Stock, $1 par 77,000
Paid - In Capital in Excess of Par - Common 213,000
Retained Earnings 58,600
Total Stockholders' Equity $622,600
What is the average issue price of the preferred stock shares? (Round answers to the nearest dollar.)
A. $104
B. $105
C. $167
D. $100
Answer:Average issue price = $105--b
Explanation:
Preferred stock , $100 par = $260,000
number of shares issued =Preferred stock / par value preferred stock= =$260,000 / $100 = 2,600 shares
Paid in capital in excess of par = total issued price - preferred stock
total issued value = paid in capital in excess of par preferred stock + preferred stock = 14,000 + 260,000=$274,000
Average issue price = Total issue price / number of shares issued = $274,000/ 2600= 105.38 = $105
Net requirements for component J are as follows: 60 units in week 2, 40 units in week 3, and 60 units in week 5. If a fixed-period, two-period lot-sizing method is used, what will be the quantity of the first planned receipt
Answer:
100 units
Explanation:
Given the following net requirement for component J:
60 units in week 2
40 units in week 3
60 units in week 5
Lot sizing involves determining the amount or quantity of items which needs to be ordered or produced. There are various lot sizing techniques. However, the fixed period requirements involves choosing a fixed number of period for determining the number of orders of each item to make. The net total number of units is then calculated, this gives the total quantity of planned receipt or requirement.
Hence, the quantity of the first planned receipt will be :
Units in week 3, then units in week 5 (2 - period interval)
Net total = (40 + 60) units = 100 units
A 55 year-old supervisor at a private company, who has always received good performance appraisals, is nevertheless fired. Two younger supervisors (37 and 42 years old, respectively) from the same department and whose performance appraisals have been lower than the 55 year old’s were nonetheless retained by the company. The employer says that it had to save money and that older supervisor earned considerably more money than the younger supervisors, which he did. If the termination is legally challenged, a court would most likely decide:________.
a. For the employer because employee could not establish a prime facie case of age discrimination under the ADEA.
b. For the employer because one of the employers retained was also over 40 years of age.
c. For the employer because it had a lawful, non-discriminatory motive for the termination.
d. For the employer because the employer had engaged in disparate treatment based on age.
Answer:
a. For the employer because employee could not establish a prime facie case of age discrimination under the ADEA.
Explanation:
This is true, because, had it been that the employee could be able to determine a prime facie reason why he was fired, it would go a long way in his case in the court of law.
15. Hallmark Inc. has dividend per share of $2.10, $2.65, $3.03 and $3.22 for the next four years. The company believes that the income will grow by a constant 4% after year four. Discount rate is 7%. What is the value of Hallmark Inc.?
Answer:
P0 = $94.36658 rounded off to $94.37
Explanation:
To calculate the value per share of Hallmark Inc. we will use the dividend discount model or DDM, DDM values the price of a stock based on the present value of the expected future dividends from the stock. The formula for price under DDM of this stock is,
P0 = D1 / (1+r) + D2 / (1+r)^2 + D3 / (1+r)^3 + D4 / (1+r)^4 +
[(D4 * (1+g)) / (r - g)] / (1+r)^4
Where,
r is the required rate of returng is the constant growth rateP0 is price or value per share todayP0 = 2.1 / (1+0.07) + 2.65 / (1+0.07)^2 + 3.03 / (1+0.07)^3 +
3.22 / (1+0.07)^4 + [(3.22 * (1+0.04)) / (0.07 - 0.04)] / (1+0.07)^4
P0 = $94.36658 rounded off to $94.37
Labor market equilibrium is best characterized by Group of answer choices a wage at which all workers are above the poverty level. a wage at which the number of people willing to work equals the number of workers firms are willing to hire. all workers receiving their ideal wage. a minimum wage at which everyone is willing to work. a wage at which all people have a job.
Answer:
a wage at which the number of people willing to work equals the number of workers firms are willing to hire
Explanation:
Labor market equilibrium is where the demand curve for labour interests the supply curve for labour. At this point, the wage rate is the wage at which the number of people willing to work equals the number of workers firms are willing to hire
Please check the attached image for a graph depicting equilibrium in the labour market
Answer:
A wage at which the number of people willing to work equals the number of workers firms are willing to hire.
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At a sales level of $300,000, James Company's gross margin is $15,000 less than its contribution margin, its net operating income is $50,000, and its selling and administrative expenses total $120,000. At this sales level, its contribution margin would be:
Answer:
$185,000
Explanation:
Jame's company gross margin is $15,000 less than its contribution margin at a sales level of $300,000
It's net operating income is $50,000
Selling and administrative expenses is $120,000
The first step is to calculate the gross margin
= net operating income + selling and administrative expenses
= $50,000 + $120,000
= $170,000
Therefore, since the gross margin at the sales level is $15,000 less then the contribution margin can be calculated as follows
= $170,000 + $15,000
= $185,000
Hence the contribution margin at this sale level is $185,000
The administrative department is not responsible for _____ communication.
written
formal
verbal and nonverbal
all of the above
Answer:
I will say c I not shore 100%
Weller Company's budgeted unit sales for the upcoming fiscal year are provided below: 1st Quarter 2nd Quarter 3rd Quarter 4th QuarterBudgeted unit sales 17,000 20,000 16,000 15,000The company's variable selling and administrative expense per unit is $1.60. Fixed selling and administrative expenses include advertising expenses of $10,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $16,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $7,000 will be paid in the second quarterRequired:Prepare the company's selling and administrative expense budget for the upcoming fiscal year.
Answer and Explanation:
The preparation of the company selling and admin expense for the upcoming fiscal year is shown below:
Quarters
Particulars 1st 2nd 3rd 4th Year
Unit Sales 17000 20000 16000 15000 68000
Variable selling
and administrative
expense per unit $1.60 $1.60 $1.60 $1.60 $1.60
Variable selling
and administrative
expense $27,200 $32,000 $25,600 $24,000 $108,800
Fixed selling and administrative expense
Advertising $10,000 $10,000 $10,000 $10,000 $40,000
executive salaries $35,000 $35,000 $35,000 $35,000 $140,000
Depreciation $16,000 $16,000 $16,000 $16,000 $64,000
Insurance $5,000 $5,000 $10,000
Property taxes $7,000 $7,000
Total fixed selling
and administrative
expense $66,000 $68,000 $66,000 $61,000 $261,000
Total
selling and
administrative
expense $93,200 $100,000 $91,600 $85,000 $369,800
Less:
Depreciation -$16,000 -$16,000 -$16,000 -$16,000 -$64,000
Cash
disbursement
for selling and
administrative
expenses $77,200 $84,000 $75,600 $69,000 $305,800
__________________ is a significant component of the customer experience.
Answer:
IT
Explanation:
Technology plays a significant role in developing, maintaining or building the customer experience. The method of purchasing goods, searching goods online and getting data have become accessible to the customers. Also, the method of paying and getting refunds have also become very easy. Increment in the customer loyalty and improvement in the customer satisfaction have too been influenced respectively.
Sterling Morrow, a fashion brand known for casual dresses, is launching a new product line: Carry Tu, a line of women’s fashion bags. The Carry Tu line will include a satchel, an overnight bag, a laptop bag, and a card-holder keychain. The Carry Tu line will compete with Grazzi, a popular brand of bags.
The sale of women's bags has seen an uptick in recent years. Consumers are willing to spend discretionary money, if they see good value for the money.
As a junior marketing strategist, you must recommend to the marketing team the appropriate pricing strategies for each of Carry Tu's bags. The pricing strategies must allow you to make a profit while still competing successfully with Grazzi.
Required:
Determining the target market and selecting appropriate pricing strategies for each of the product items in Carry Tu's line of bags.
Answer with Explanation:
If the company desires Carry Tu product line to breakeven within first 8 months then my recommendation would be to target working class women. This is because working class women spend most of their earnings on fashion bags, clothing, shoes, satchel, makeup, overnight bags, cell phones, jewelry, etc. So if we are targeting a customer who has higher purchasing power then it is more likely that our quality product will breakeven very quickly. A working class women roughly owns 2-4 bags which means their is huge market for Carry Tu, especially in the case of working class women. Other items like overnight bags, satchel, card holder key-chains, laptop bags, etc will be adding value due to growing demand of quality products and shopping habits of working class women.
Satchel is usually used by both students and working class women, now again it will be one of the most value adding product among the Carry Tu product line.
Laptops bags are rarely used as the companies that sell their products has a laptop with bag in a package offering. So it will be less value adding item. Likewise card-holder key-chains are also rarely used by students and working class women.
Overall assessment shows that the best customer segment that the company must focus should be working class women.
Pricing Strategy for Carry Tu Line:
The pricing strategy of the company must be increasing sales oriented which would increase the demand of the product if the purchasing power of the customer is not much high. If the product is differentiated and quality oriented and also that the customer's purchasing power is high enough then the company must charge higher cost to reflect its brand and quality product.
The satchel is widely used by the students and working class women who work in small organizations, hence the company must follow penetration pricing strategy. This is the strategy that will help in covering the fixed cost by earning small contribution on each product. It will also increase the sales which means the total contribution will be enough to cover fixed cost of the organization. This pricing strategy is mostly followed to increase the market share and as in the case of Carry Tu, it is a new entrant in the market, hence pricing low would be helpful in developing customer relation and covering the fixed cost so that the company breakeven in first 8 months of operation.
Overnight bag and laptop bags are mostly used by the working class women who prefer differentiated and quality products. Which means that the product will be differentiated and quality product to compete with Grazzi. The company must follow Competitive pricing strategy so that the customer perceives similar value that Grazzi is offering in the market.
Card-holder key-chains are rarely purchased by working class hence it will also follow penetration pricing strategy to increase its sales and increase the total contribution earned on its sales.
The pricing strategy are based on the market condition of Carry Tu as it is a new entrant in the market and is based on Grazzi brand valued by customers.