Product Costing


Select your favorite drink or snack item manufactured by a publicly held company. For this product predict the following: (USE GRANDMA’S OATMEAL RAISIN COOKIES )

  1. Where is the product manufactured?
  2. Given the suggested retail price of the company and using a 50% markup on price at retail, determine the sell price to the distributor/merchandiser. Review the company’s overall gross margin. If the product is sold direct to the consumer, you may apply the gross margin as calculated. Applying the gross margin percentage to your product sales price, infer the cost of the product. Present your calculations in a supporting table.
  3. Complete the same exercise for a competitor’s product of the same type. Present your calculations in a supporting table included in your paper.
  4. Comment on the differences in cost between the two competitors, and assert the reason for this difference (e.g., does the company compete on cost or differentiation?)
  5. Apply the concept of the value chain to this product. What types of costs would be relevant for each segment of the value chain for this product?
  6. Research a single critical ingredient of your snack and its source. Do you expect significant increases in the cost of this ingredient over the next year? Support your response with input from the commodities market or other economic data.
  7. What are the opportunities to offset this price increase, maintain gross margin, and offer the product to consumers at the same price currently? Present your calculations in a supporting table included in your paper.

In your analysis, include the following:

  1. An introduction
  2. Requirements 1 – 7 (do not forget to show your work)
  3. Conclusion

Your paper should meet the following requirements:

  • 7-10 pages in length including supporting tables (required number of pages does not include the title page and the reference page)
  • Include at least 2-3 outside sources

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