Cost Based Pricing and profit calculationsA 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?