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In: Accounting

Identify and analyze product price, sample cost structure The company we chose was 3M clear tape...

Identify and analyze product price, sample cost structure

The company we chose was 3M clear tape size 1/2" X 36 yds and the product mdl# S-10212

Within your CLC, choose a publicly traded company and identify one of its products that the group will analyze.The company we chose was 3M clear tape size 1/2" X 36 yds and the product mdl# S-10212 Describe the strategic implications that would need to be considered in setting a price for that product, and determine whether the group would use a market-based pricing approach or a cost-based pricing approach to setting the product price. Explain the rationale behind choosing the pricing approach. Identify the costs that the group thinks would be considered in setting the product price, and come up with a sample cost structure for the product (make it as realistic as possible). Calculate a price for the product, and defend your product price and related cost structure.

CLC - Pricing Decisions

Expert Solution

Factors consider in setting the price of product.

Market demand
Level of competition
Taste & preference of customers.
Development cost
Price of competing firms
Government Policies

Group will used market based pricing approach

Reason behind it is that Company chosen is well established in market(Public traded company) & the product is not new in market.

Cost considered in setting price of product

Research & Development cost
Production cost
Packing cost
Marketing cost
Selling & distribution cost
External service cost (warranty,repair)

Price of product

Material consumed $3

Variable cost

Production $2

Marketing $1

fixed cost

Production $3

Selling cost $2

Total cost

$ 11

Profit $1

price

$ 12

ekkarill92 answered 2 years ago

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