Question

Assume it costs Lady Marion Seafood, Inc. $30 to catch, process, freeze, package, and ship 5-pound packages of Alaskan salmon. The firm adds 60 percent to the cost of its salmon products and charges customers a total of $48 for a postage-paid vacuum-sealed package. What type of pricing does Lady Marion Seafood use to arrive at its final price?a. target profit pricing.b. customary pricing.c. target return-on-sales pricing.d. bundle pricing.e. standard mark up pricing.

Answer 1

Standard mark up

Step-by-step explanation:

Standard mark up is a pricing strategy where a certain percentage of the cost price is added to the cost price to allow for expenses and reasonable profitin order to arrive at the selling price

Looking at the scenario given , it is observed that 60% is added to the total cost price to arrive at the $48 selling price. The situation perfectly describe the process of standard mark up pricing.

Answer 2

Standard markup pricing

Step-by-step explanation:

The reason is that under standard markup pricing the cost of the product is deemed 100% and markup is calculated by multiplying the percentage markup with the total unit cost which is 100%.

For your understanding of standard markup pricing:

Selling price = Cost + Profit

160% = 100% + 60%

By putting values:

Selling price 160% = $30 is 100% Cost + 60% of 100% cost is profit markup

Selling price 160% = $30 + $30 * 60% = $48