Question

4. For retailers buying direct from the manufacturer, the MSP represents their product cost, which they...

4. For retailers buying direct from the manufacturer, the MSP represents their product cost, which they will mark up to set the retail price. Given that an SKU has an MSRP of 8.00, calculate the MSP (cost to channel) and retail price for each channel in the table.

Channel #1

Channel #2

Channel #3

Channel Discount

20%

25%

30%

Channel Margin

18%

20%

25%

Cost to Channel

Retail Price
Business   Accounting   
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Homework Answers

Answer #1

The computation of MSP (the cost to channel) and retail price for each channel is shown below:-

MSP (i.e., Cost to Channel ) = MSRP * (1-Channel discount percentage)

Retail Price = Cost to Channel * ( 1 + Channel Margin percentage)

For SKU#1, MSP = 8 *(1 - 0.18) = $6.56

Retail Price = $6,56 * ( 1 + 0.18) = $7,7

With the help of the following formulas:-

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