Question

Enchante Inc., a designer clothing company buys $400 worth of silk from a silk trader, and $30 worth of accessories from AccessoriesRUs to produce each dress. If the value-added by Enchante is equal to $200, then according to the value-added approach, the price of the designer dress should be: a $200. b $600 c $230. d $630. e $830.

Answer 1

Answer:

$630 is the correct answer.

Explanation:

Value added is the difference of the selling price of the product and the costs incurred on the product other than the value added Cost. So this means:

Value Added = Selling Price - Costs incurred on the product other than the value added

Here Value added is $200 and other than value added expenses incurred on the product are $400 and $30. This implies:

$200 = Selling Price - ($400 + $30)

Selling Price = $200 + ($430) = $630

Answer 2

Answer:

d $630

Explanation:

Value added approach is a strategy for pricing a product which consider all the costs incurred and and all other factors which can effect the price of the product like how customer sees this product and how much he/she is willing to pay for this product etc.

Price of Designer dress = All cost incurred + Value added to the product

Price of Designer dress = ( 400 + 30 ) + 200 = $630