Question:Pet Designs makes various accessories for pets. Their trademark
product, PetBed, is perceived to be high...
Question
Pet Designs makes various accessories for pets. Their trademark
product, PetBed, is perceived to be high...
Pet Designs makes various accessories for pets. Their trademark
product, PetBed, is perceived to be high quality but not
extravagant, and is sold in a variety of pet stores. Wanda Foster,
marketing manager, has convinced her boss that they are missing an
important segment of the market. “We can increase the quality of
the material and design and market PetBed to a higher-end
clientele,” Wanda claims. “We won’t compete with our existing
product. It’s win-win!”
PetBeds sell for $51 each. Wanda estimates the gross margin at $35.
After working with production engineers and the marketing research
team, Wanda has designed a bed that she believes the new market
segment will pay $78 for. The production engineers and accountants
believe it will cost about $62 to make.
(a)
Your answer is incorrect. Try again.
If Pet Designs uses cost-plus pricing and prices most products like
the original PetBed, what should be the price of the high-end
PetBed? (Round answer to 0 decimal places, e.g.
25,000.)
Price of the high-end
PetBed
$ per bed
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(b)
If Pet Designs wants to preserve the existing gross margin
percentage, what is the target cost at a market price of $78?
(Round answer to 0 decimal places, e.g.
25,000.)