Electronic Component Company (ECC) Is a Producer of High-End Video

question 53

Multiple Choice

Electronic Component Company (ECC) is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" video player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new video player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 video players per year.

Irrespective of the competitor's price, what is EEC's required selling price if the target profit is 25% of sales and current costs cannot be reduced?

• A) $280.00.
• B) $292.50.
• C) $299.00.
• D) $308.50.

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Definitions:

Annual Ordering

Refers to the total cost and process associated with placing orders for goods or materials over the course of a year.

Gadgets

Small mechanical or electronic devices or tools, especially those that are ingenious or novel.

Carrying Cost

The total cost of holding inventory, including storage, handling, insurance, and opportunity costs, among others.

Warehouse Security

Measures and practices implemented to protect stored goods, inventory, and facilities from theft, damage, and other risks.