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Cost-Plus Pricing StrategyProduct Details:Product A:Variable Costs: $60,000Fixed Costs: $40,000Desired Profit Margin: 30%Product B:Variable Costs: $80,000Fixed...

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Accounting

Cost-Plus Pricing Strategy

Product Details:

  • Product A:
    • Variable Costs: $60,000
    • Fixed Costs: $40,000
    • Desired Profit Margin: 30%
  • Product B:
    • Variable Costs: $80,000
    • Fixed Costs: $50,000
    • Desired Profit Margin: 25%

Requirements:

  • Calculate the cost-plus price per unit for Product A and Product B.
  • Determine the total price for each product based on the desired profit margin.
  • Present the calculations in a detailed table format.
  • Discuss how the cost-plus pricing strategy can affect market competitiveness.
  • Analyze the sensitivity of the pricing strategy to changes in cost structure.
  • Evaluate the long-term strategic benefits of cost-plus pricing for the company.

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