Price and Pricing Policy (MGTC3218)
Higher Institute of Commerce and Management (HICM)
Semester: Second Semester
Level: 300
Year: 2014
SECTION ONE: (5marks)
Explain five elements that should be considered in market oriented price setting.
SECTION TWO (15 marks)
EXERCISE ONE:
Mr. CHI undertakes a restaurant He offers meals to his customers at an affordable price. His restaurant
is yearly running during 360 days. And the fixed cost incurred amount to 9,000 000 CFAF Daily a
single meal is offered to his customer at 1.600 CFAF. The enterprise spends on average for each meal
served 640 CFAF.
Work required:
1.
How many customers must be served in order to cover up the costs incurred? (2marks)
2.
Determine the turnover that will yield a profit of 3,000,000. Determine the corresponding number
of customers. (3marks)
3.
A market survey established that the enterprise cannot afford to serve more than 10,000 customers.
Knowing that the customers are not sensitive to a variation of price, determine the price the enterprise
must offer its meals in order to maintain its profits at 3,000,000 CFAF. (3marks)
EXERCISE TWO
FRUTAS produces fruit juice and commercialize it to retailers in cartons. Its main charges consist of
production and distribution charges. The detail of these charges, for the month of March 2014, provided
in the following table:
The production charges and the distribution charges are proportional to the number of cartons produced
and sold respectively.
During the month of March 2014,1,000 cartons have been sold at 100^000 CFAF each.
Work required:
1.
Determine:
-
the total variable costs as well as the unit variable cost; (lmark)
-
cost price and the average cost(l mark)
-
the operating result, (l mark)
2.
FRUTAS is offered 200 cartons at 55,000 CFAF each. This retailer does not induce additional
distribution costs except a global increase of 2,000,000 CFAF for the special packaging. FRUTAS is
almost sure the new customer will not place another order because he is to close down within 2 months.
The manager of the enterprise is inclined not to accept this special order because the price offer is far
Fixed charges Variable charges
Production charges 20,000,000 40,000,000
Distribution charges
16,000,000
14,000,000
UNIVERSITY OF BAMENDA
HIGHER INSTITUTE OF COMMERCE AND MANAGEMENT (HICM)
SESSION:
CONTINUOUS ASSESSMENT 2013/2014
DEPARTMENT:
MARKETING and MANAGEMENT
LEVEL: 200
COURSE TITLE: PRICING POLICY
TIME ALLOWED: 2 Hours
CREDIT VALUE: 6
LECTURERS: Mr NYOBE Joseph, Mr EYONG and Mr SAMA
Instruction: Attempt all questions!
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below the average cost. Do you agree with him? Justify your answer. (4marks)
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