McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Part Four.

FIGURE 12-2 FIGURE 12-2 Four approaches for selecting an approximate price level 12-2

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide... percentage of sales volume...

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide FC.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide FC+ UVC.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide FC+ ( UVC x Q ).

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide FC+ ( UVC x Q ) Q x.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide FC+ ( UVC x Q ) Q( 1- Target Return on Sales ) x.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide FC+ ( UVC x Q ) Q( 1- Target Return on Sales ) x.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide $30,000 + ( $42 x 1,800) Q( 1- Target Return on Sales ) x.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide $30,000 + ( $42 x 1,800) ( ) x.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide $30, ,600 1,800( ) x $42 ( 1,800) x

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide 105,600 1,800( ) x.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide 105,600 1, x.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide 105,600 1,368.

Target Return on Sales Pricing Target Return on Sales = 24% To calculate a price to achieve a profit that is a specific for a wristwatch UVC = $42.00 FC = $30,000 Upper Limit Price = $78.00 Q = 1,800 You will need to manually advance to the next slide $77.19 $ %....

FIGURE 12-2 FIGURE 12-2 Four approaches for selecting an approximate price level 12-17

Year 1Year 2 Target Return on Investment

Upper-limit price $78Year 1Year 2 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 Less: Fixed Costs$ 30,000 You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008 Less: Taxes$ 17,004 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008 Less: Taxes$ 17,004 Net Profit After Taxes$ 17,004 You will need to manually advance to the next slide.

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008 Less: Taxes$ 17,004 Net Profit After Taxes$ 17,004 Investment$250,000 You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008 Less: Taxes$ 17,004 Net Profit After Taxes$ 17,004 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide.....

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600 Gross Margin (Net Sales – COGS)$ 64,800 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008 Less: Taxes$ 17,004 Net Profit After Taxes$ 17,004 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide...

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide...

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8%6.7% You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investme$250,000 Return on Investment 6.8% You will need to manually advance to the next slide. $77.56 $

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56$78.34 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8%6.7% You will need to manually advance to the next slide..

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,252 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,252 Less: Taxes$ 17,004$ 16,626 Net Profit After Taxes$ 17,004$ 16,626 Investment$250,000 Return on Investment 6.8%6.7% You will need to manually advance to the next slide... $77.90 $78.34

Upper-limit price $78Year 1Year 2 Price per unit (P) $77.56$77.90 Units Sold (Q)1,800 Unit Variable Cost (UVC) $42$42.42 Fixed Costs (FC)$30,000 Investment$250,000 State and Federal Taxes50% Net Sales (P X Q)$139,608$140,220 Less: Cost of Goods Sold (Q x UVC)$ 75,600$ 76,356 Gross Margin (Net Sales – COGS)$ 64,800$ 63,864 Less: Fixed Costs$ 30,000 Net Profit Before Taxes$ 34,008$ 33,864 Less: Taxes$ 17,004$ 16,932 Net Profit After Taxes$ 17,004$ 16,932 Investment$250,000 Return on Investment 6.8% You will need to manually advance to the next slide....

FIGURE 12-2 FIGURE 12-2 Four approaches for selecting an approximate price level 12-47

FIGURE 12-2 FIGURE 12-2 Four approaches for selecting an approximate price level

FIGURE 12-2 FIGURE 12-2 Four approaches for selecting an approximate price level 12-49

At-market price Above-market price Below-market price..

FIGURE 12-2 FIGURE 12-2 Four approaches for selecting an approximate price level 12-51

End of Program.