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question 26

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Use this information to answer the following question that refer to the CPI case. Conservo Products, Inc. (CPI) , with annual sales of $200 million, is a well-known producer of a variety of paper products, almost all of which are made from recycled materials. Picnic plates account for about 70 percent of CPI's sales. The rest of the firm's sales come from custom-designed materials-such as box liners and spacers, small boxes, and disposable products-like trays, towels and napkins.
CPI's picnic plates are sold through "sales reps" to grocery wholesalers and retail grocery chains. The sales reps are paid a 5 percent commission on all sales in their assigned territories. They usually handle related-but noncompeting-lines for several other manufacturers. Along with their selling duties, the sales reps help CPI with local advertising and sales promotion efforts. Orders for the custom products are obtained by area managers who are paid a straight salary to call on business and institutional customers. The area managers are trained paper specialists and often help their customers design the products they order.
The picnic plates are priced to give CPI a 90 percent markup on the cost of producing the product-with the cost figured by taking the total factory cost for the previous year and dividing that total cost by the number of units produced and sold during that period. The firm's invoices read "F.O.B.-Delivered" and "1/10, net 30." Customers are allowed to deduct 3 percent from the face value of the invoice for buying plates in carload quantities, and another 2 percent for advertising them locally.
The custom products are sold "F.O.B. mill"-with CPI offering a price for each job. Competition is strong from many other manufacturers who are able to offer very similar products which meet the customers' specifications.
CPI forecasts that sales will increase to $250 million by 2012. However, much of this growth is tied to picnic plates-a market in which the firm has about a 7 percent market share and faces aggressive price competition from many smaller firms with greater brand familiarity. Further, CPI has been late with more than 50 percent of its plate orders due to scheduling conflicts with orders for custom products.
For its plates, CPI uses ______________ pricing.

Definitions:

Major Organic Product

The primary substance produced in the highest yield in an organic reaction when there are multiple possible products.

Structure

The arrangement of atoms within a molecule, which dictates the molecule's chemical properties and reactions.

Major Organic Product

This refers to the primary or chief compound produced as a result of an organic reaction, highlighting its importance in synthetic outcomes.

Structure

The arrangement or organization of parts to form an object, system, or concept.