Maui Style Onion Chips is a product that is manufactured by the Frito Lay Corporation which is headquartered in Plano, Texas. Texas is a state that is friendly to business which is likely why the headquarters are located here. In addition to low tax liability and no personal income tax, Texas boasts of it legal climate being responsive to the needs of corporations. This makes Texas fairly attractive for such businesses as Frito Lay. Frito Lay has nearly 30 manufacturing plants throughout many states including: Florida, Kansas, Texas, California and Lousiana. It is at one of these plants that the Maui Style Onion Chips are manufactured. (Texas Wide Open for Business, 2015) .
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.
According to the ABC Store in Hawaii, the retail price at retail to the consumer is $6.50 for a 6 ounce bag. (abcstores.com, 2015) Assuming a 50% markup from the distributor then the price that distributor pays for the product would be $4.33 per 6 ounce bag (x1.5=$6.50). The PepsiCo financial statements reveal that the gross margin for the company to be 53%. (PepsiCo, 2015) Thus, the price to manufacture the product can be derived by applying the gross margin to the selling price to get the price the product is manufactured which is $2.03 (.47*$4.33=$2.03). The gross margin for the Frito Lay Company is quite impressive at 53% which is far and above the 37% that is the sector average. .
Complete the same exercise for a competitor's product of the same type. Present your calculations in a supporting table included in your paper.