The Vandal Lounge, (slogan; “We trashed the place so you wouldn’t have to”) is trying to...

The Vandal Lounge, (slogan; “We trashed the place so you wouldn’t have to”) is trying to decide drink prices. After rejecting a shrewd suggestion from the head bartender that they charge more for each succeeding drink on the assumption that the impaired patrons won’t have enough sense to understand the novel pricing scheme, you head to the back with a pot of coffee to decide the price of Vandal beer. You estimate that next year you will have sales of $200,000. You want a next profit of $20,000. In addition, you feel that all expenses (excluding COGS) will total around $100,000. What must your IMU plan be?

Expert Solution

Answer : Initial Markup Unit = (Operating Expenses + Net Profit) / Sales

= (100000 + 20000) / 200000

= 60% on sales.

jeff jeffy answered 2 years ago

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