Cost Based Pricing and profit calculations A Grocery store makes pricing decisions based on cost of
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Cost Based Pricing and profit calculations A Grocery store makes pricing decisions based on cost of the
products All other costs are fixed at $800,000 per year The average cost of
inventory at the store is $1,000,000 The inventory turns over eight times a
year
a If prices
are set at 12% above costs, what is the profit of the grocery store for the
year?
b What is
the profit of the grocery store if turnover increases to 10 times per year and
prices remain at 12% above cost, what is the profit of the grocery store for
the year?
c What
price mark-ups is necessary for the company to have a @300,000 profit if
inventory turnover occurs eight times per year?