Question

One of the primary purposes of calculating a total cost is to evaluate whether or not a company should produce a product. Marketing firms or departments typically do extensive research with potential customers to determine what price they are willing to pay for a new product, like Wedgewood's specialty candles. After the company knows what price customers are willing to pay and how much it costs to produce each product, they can determine whether or not it makes sense to introduce the new line. This process is called Target Pricing. Tip: Microsoft Word has many Using your answer to Q-3.d., decide if Wedgewood should continue to produce the imprinted candle line. Assume that Wedgewood needs to make a 150% markup on their production costs to cover S&A costs and to achieve their desired profit margin. A high quality, four-inch sculpted candle can sell for $10.00 to $10.50 in the current market. templates, including some for formal business letters. If you aren't comfortable writing a business letter from scratch, start with one of these templates. In Word, click on File, then New, scroll down and you will see the templates. Write a business letter to Jeremiah Wedgewood, the company CFO, explaining and defending your position on beginning the new line. In doing so, don't forget that a CFO will want to see the cost and revenue numbers. Look under Letters to find one you like.

Answer 1

Hi Jeremiah Wedgewood,

Thank you for asking our view to continue to produce imprinted candles. I am submitting my views are as follows :

a. Cost of each product : $4 to $4.20 due to sale price variation.

b. Profit on each product is $6 to $6.30 while selling price is $10 to $10.50.

I am strongly recommending you to continue your business due to high profitability and low cost of the production.

I hope the above suggestion helps to resolve your issue. if you need any further assistance and I will be glad to assist you

Thanking You