CHAPTER 18
Pricing and Profitability Analysis
COLLABORATIVE LEARNING EXERCISE SOLUTION
1. Introduction phase—Quarter 1. Sales are low and the expenses needed to write and produce the
videotape are incurred.
Growth phase—Quarters 2 and 3. Sales are increasing rapidly.
2. Profit statement by quarter in thousands:
Quarter
1 2 3 4 5 6 7 8
Sales $100 $300 $540 $600 $600 $600 $300 $20
COGS* 15 45 81 90 90 90 45 6
Gross profit $ 85 $255 $459 $510 $510 $510 $255 $14
Market testing (21) 0 0 0 0 0 0 0
Script and