Statistics|441|British Columbia Institute of Technology
Please help me answer these homework questions with the most amount of work shown. My professor is no help 1. Jones Industries faces a dilemma in pricing existing products. Competitive pressures are forcing the firm to consider a price discount of 10% The current price is $ 50.00 per unit and the variable cost per unit is $ 40.00. The current sales level is 100 units per month. What will the total monthly sales in units have to be to achieve the same profit dollars as under a no discount strategy? Explain your answer. 2. Liquid Dynamite Inc. faces a tough problem. The firm is considering discounting the product by 10% in the face of rising raw material costs. The current price is $ 100.00, the current variable cost per unit is $ 45.00. The new price of raw material will drive the variable cost per unit up to $46.00 per unit. By what percent will the unit product sales have to increase to achieve the same profit compared to where the firm was before these changes? Explain your answer. 3. Carter Plastics is faced with a rare opportunity. The company can increase prices by 5% but only if capacity is added to guarantee an uninterrupted supply of product to the core customers. To meet the projected demand the firm will need to spend an additional $10,000 per month to rent warehouse space over and above the current monthly fixed costs of $40,000. The current price is $50.00 with per unit variable costs totaling $30.00 per unit. Current sales per month are 3,000 units. What will the total unit sales per month need to be to justify the additional expenditure for the warehouse space (keep profits at the same level)? Explain your answer. 4. Boggs Industries has an opportunity to sign a one year contract with an existing customer. The current price is $20.00 and the current variable cost per unit is $10.00.The customer has agreed to enter into a contract to purchase 1,400 units next year. Last year they bought 1,000 units. The customer has asked for a $3.00 discount from last year's price. Do you recommend the contract be signed? Justify your answer. 5. AT&T uses the following slogan: "You get what you pay for". Which price sensitivity effect is being applied here? Explain. 6. Woolite uses the following slogan: "Woolite cleans this dress for pennies. So why dry clean it for dollars?". Which of the price sensitivity effects is being applied here? Explain. 7. Verizon Cellular has been offering to pay the cancellation fee for a customer's current cell phone contract to get them to switch to Verizon. What price sensitivity issue are they addressing? 8. Chain grocery stores that operate in both downtown locations and the suburbs often charge different prices for the very same items depending upon in which store the item is purchased. What segmenting tactic is being used here? 9. The University of Oregon tried an experiment where classes that started prior to 9:00 AM or after 3:00 PM had lower tuition than classes taught in the middle of the day. What segmenting tactic were they using? 10. Many car companies make cars with lots of model differentiation. One company makes five different models: LX, LE, LTD, G, and F models. Each model comes with a different set of options and a different price. What segmenting tactic are they using?