## (Solution Download) 1 Identify the change in total revenue the marginal revenue

1. Identify the change in total revenue (the marginal revenue) from the fourth shirt per day. What price reduction was necessary to sell four rather than three shirts?
2. What is the change in total revenue from lowering the price to sell seven rather than six shirts in each color each day?
3. Break out the components of the \$28 marginal revenue from the seventh unit sale at \$38.31?that is, how much revenue is lost per unit sale relative to the price that would ?move? six shirts per color per day?
4. Calculate the total revenue for selling 10?16 shirts per day. Calculate the reduced prices necessary to achieve each of these sales rates.
5. What number of shirt unit sales most pleases a sales clerk with sales commission- based bonuses?
6. Would you recommend lowering price to the level required to generate 15 unit sales per day? Why or why not?
7. What is the operating profit or loss on the fifteenth shirt sold per color per day?
What about the twelfth? The tenth?
8. How many shirts do you recommend selling per color per day? What then is your recommended dollar markup and markup percentage? What dollar margin and percentage margin is that?

The setting is a Ralph Lauren outlet store, and the product line is Polo golf shirts. A product manager and the General Manager for Outlet Sales are analyzing the discount to be offered at the outlet stores. Let?s work through the decision at the level of one color of golf shirts sold per outlet store per day. The decision being made is how low a price to select at the start of any given day to generate sales at that price throughout the day. The demand, revenue, and variable cost information is collected on the followingspreadsheet:

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