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Wendel Stove Company is developing a "professional...

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Wendel Stove Company is developing a "professional" model stove aimed at the home market. The company estimates that variable costs will be $2,500 per unit and fixed costs will be $12,000,000 per year. Question- Suppose the company wants to set its price to equal to full cost plus 30 percent. To determine cost, the company must estimate the number of units it will produce and sell in a year. Suppose the company estimates that it can sell 6000 units. What price will the company set?,"So the overall question is- Wendel Stove Company is developing a "professional" model stove aimed at the home market. The company estimates that variable costs will be $2,500 per unit and fixed costs will be $12,000,000 per year. A- Suppose the company wants to set its price to equal to full cost plus 30 percent. To determine cost, the company must estimate the number of units it will produce and sell in a year. Suppose the company estimates that it can sell 6000 units. What price will the company set? B- What is odd about setting the price based on an estimate of how many units will be sold? C- Suppose the company sets a price as in part a, but the number of units demanded at that price turns out to be 5000. Revise the price in ligt of demand for 5000 units.

 

Paper#10256 | Written in 18-Jul-2015

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