Service inseparability means that services cannot be separated from their providers, whether the providers are people or machines. Service variability means that the quality of services depends on who provides them as well as when, where, and how they are provided. Service perishability means that services cannot be stored for later sale or use. Services offered by a dentist are much more intangible, inseparable, variable, and perishable than those offered by a drug store because the dentist offers more of a pure service than does a store that sells merchandise. Compared to the services offered by a drug store, it is more difficult to evaluate the quality of the service provided by a dentist prior to the visit, and in some cases even after the service was performed. The patient must be present for dental work to be performed, and the time spent creating the service cannot be stored for later purchase if the patient misses an …show more content…
A company faces fixed costs of RM100,000 and variable cost of RM8.00/unit. They plan to directly sell their product to the market for RM12.00. How many units must they produce and sell to break even?
3. A manufacturer is trying to determine its breakeven volume. With fixed costs of RM100,000, a variable cost of RM10, and expected sales of 50,000 units, what should the manufacturer’s unit cost be to breakeven?
4. (a) A consumer purchases a mobile phone for $150 from a retailer. If the retailer’s mark-up is 40 percent, and the wholesaler’s mark-up is 15 percent, both based on their selling prices, for what price does the manufacturer sell the product to the wholesaler? Please show your calculations below.
(b) If the unit variable costs for each mobile phone are $40 and the manufacturer has fixed costs totaling $200,000, how many mobile phones must this manufacturer sell to breakeven? Please show your calculations below.
***END*** Week 9 - Topic 6: Pricing |
Discussion question. Present at the end of the class.
Which pricing strategy – market skimming or market penetration – does each of the following companies use? 1.