Question

Companies must always examine their pricing ________.

		A) based on the supply of the product
		B) based on the full cost of producing the product and price to make a profit
		C) through the eyes of their customers and then manage costs to produce a profit
		D) based on the GAAP cost of producing the product and then add a mark-up

Crimpson Company has invested $2,200,000 in a plant to make commercial juicer machines. The target operating income desired from the plant is $303,000 annually. The company plans annual sales of 7000 juicer machines at a selling price of $500 each. What is the markup percentage as a percentage of cost for Crimpson Company?

		A) 8.7%
		B) 13.8%
		C) 9.5%
		D) 0.9%

Answer 1

1)
Correct Option : C)
through the eyes of their customers and then manage costs to produce a profit.
Explanation: In the globalization world the quality with affordable price to the customer became an essential factor to the
	growth and profitability of any business hence the company must examine the price
	through the eyes of their customers and then manage costs to produce a profit
2)	Target Profit per juicer =$303000/7000
		=$43.29
	Price Per Juicer		500
	Les:
	Profit margin		43.29
	Therefore cost		456.71
	% of profit margin as % of cost = $43.29/456.71
		=9.5%
	Correct Option : C