Based on WS#6B: Janmar 20% Price Cut – Possible Retail ResponsesAssume that the typical retail store has a GM of 40%:Hence the following: Initial Price cut (1) Price cut (2) Price cut (3)Retail $100 $100 $80 $88CGS $60 $48 $48 $48 (Janmar SP)$GM (R) $40 $52 $32 $40 %GM (R) 40% 52% 40% 45.5%Given the above, answer the following:A. Which of the above would you characterize as best representing a price cut “pass through”? Explain your reasoning.B. Assume that the store is selling 100 units a month at the “Initial Price” of $100. How many units would the store need to sell per month in each of the Price cut conditions above to maintain the $ revenue of the “Initial Price” condition? Show your logic.1. Price cut (1):2. Price cut (2):3. Price cut (3):C. Again ssume that the store is selling 100 units a month at the “Initial Price” of $100. How many units would the store need to sell per month in each of the Price cut conditions above to maintain the $ gross margin of the “Initial Price” condition? Show your logic.4. Price cut (1):5. Price cut (2):6. Price cut (3):D. Which of the 3 responses above would you recommend to a retail client? Carefully explain the basis for your decision. What additional information would you find useful, and why?
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