The Flint Fan Corporation Is Considering the Addition of a New

question 183

Multiple Choice

The Flint Fan Corporation is considering the addition of a new model fan, the F-27, to its current products. The expected cost and revenue data for the F-27 fan are as follows:

If the F-27 is added as a new product, it is expected that the contribution margin of other products will drop by $7,000 per year.
-At what selling price would the new product be just breaking even?

• A)$52.25 per unit
• B)$50.50 per unit
• C)$55.75 per unit
• D)$49.00 per unit

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Definitions:

Retailer-sponsored Cooperatives

Organizations owned and operated by a group of retailers aimed at improving purchasing power and marketing capabilities through collective efforts.

Franchising

A business model that allows an individual or group to operate a business using the branding and business structure of an established company.

Contractual Vertical Marketing System

A system in which independent firms at different levels of the distribution chain work together through contractual agreements to achieve greater economies of scale and reach a greater market effectiveness than they could achieve alone.

Horizontal Marketing System

A collaboration strategy where companies at the same level of the value chain join forces to exploit a marketing opportunity.