TRADING MARGINS AND SELLING PRICES

1. Shannon’s Brewery has developed a super-premium craft beer to be marketed as Shannon’s Irish Stout. The cost of production (brewing, canning, etc.) is about $4.18 per six pack. If Shannon’s needs a 12% margin what will Shannon’s price per six pack be to its distributor, Miller of Denton? Assume the margin is expressed as a markup based on cost. Compute your answer to the nearest penny.

2. Shannon’s Brewery has developed a super-premium craft beer to be marketed as Shannon’s Irish Stout. The cost of production (brewing, canning, etc.) is about $4.06 per six pack. If Shannon’s needs a 10% margin what will Shannon’s price per six pack be to its distributor, Miller of Denton? Assume the margin is expressed as a markup based on selling price. Compute your answer to the nearest penny.

3. Shannon’s craft beers are sold via a three tier distribution channel, consisting of its brewery, a distributor (Miller Distributing) and the retailer. At the retail level, a six pack of its craft beer sells for about $12.00. If the typical retailer demands a 50% markup based on selling price and the distributor also wants a 38% markup based on selling price, what will be the maximum that Shannon’s can charge the distributor for a six pack? Compute your answer to the nearest penny.

4. Shannon’s has developed a super-premium craft beer to be marketed as Shannon’s Irish Stout. The cost of production (brewing, canning, etc.) is about $4.00 per six pack. If Shannon’s needs a 10% margin, the distributor needs 40% and the retailer needs 53%, what will be the likely selling price suggested by Shannon’s to retailers? Assume all margins are expressed as markups based on selling price. Compute your answer to the nearest penny.