Scribd
Upload
234 views4 pages

Optimal Carpet Pricing for Auto Industry

This company manufactures and assembles high-grade carpet and floor mats for luxury automobiles and recreational vehicles. It is the largest provider of carpets for automobiles and focuses on both original equipment and replacement carpet as well as customizing vans.

Uploaded by

Tanya Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
234 views4 pages

Optimal Carpet Pricing for Auto Industry

This company manufactures and assembles high-grade carpet and floor mats for luxury automobiles and recreational vehicles. It is the largest provider of carpets for automobiles and focuses on both original equipment and replacement carpet as well as customizing vans.

Uploaded by

Tanya Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

COMPANY INFORMATION

 Makes high grade carpet material for use in automobiles and recreational vans.
• Assembles carpet and floor mat for top of the line cars
• Focus on replacement and van customizing
• Largest company in the segment of carpets for automobiles
Should former carpet company produces carpet at
$3.95 or $ 4.75 ?

 In case of price In case of price $4.75


$3.95

Sales $592500 Sales $356250


Variable expenses:$541200 Variable expenses:$289125
Contribution Margin :$51300 Contribution Margin:$67125

They should keep price at $4.75 as they are getting more contribution margin
ADDITIONAL INFORMATION REQUIRED
ARE :
• Competitors loss sustaining ability
• Cost of production of former carpet company
• Cost of production of competitors for previous year
• Future market trends
• Exact fixed cost
Decision to raise the price in 1993 is a
good one ?
 Yes forner is expected to receive higher contribution margin

You might also like