CLEMENTE, ALEN EMMANUEL D.

P&C FINALS: PART 1

BS-ENTREP 4-3

1. On your own understanding, present a Schematic Diagram of Activity-Based Costing

2. Describe the Inventory and Distribution Management of Lamoiyan Corporation.
3. Explain how "SRP or Standard Retail Price" is being identified per product and promulgated in the
market

The Standard Retail Price (SRP) of a product is usually determined by the manufacturer or distributor of
the product. This price is based on various factors, including the cost of production, marketing expenses,
and competition in the market.

The first factor that affects the SRP is the cost of production. This includes the cost of raw materials,
labor, and other expenses that are incurred during the production of the product. The manufacturer or
distributor must factor in these costs when setting the SRP in order to ensure that they can make a
profit. If the SRP is set too low, the manufacturer or distributor may not be able to cover their costs,
while if it is set too high, they may find it difficult to sell the product due to increased competition.

Marketing expenses are another important factor that affects the SRP. This includes advertising and
promotional activities that are undertaken to promote the product and increase its sales. The
manufacturer or distributor must factor in these expenses when setting the SRP in order to ensure that
they can recoup these costs and still make a profit. The marketing expenses may also affect the
perception of the product in the minds of the consumers, and if the expenses are high, the SRP may
need to be set at a higher level to cover these costs.

Competition in the market is another important factor that affects the SRP. The manufacturer or
distributor must take into account the prices of similar products offered by competitors when setting the
SRP. If the prices of similar products are lower, the SRP may need to be adjusted downward to remain
competitive. On the other hand, if the prices of similar products are higher, the SRP may be set at a
higher level to ensure that the product stands out in the market.

To promulgate the SRP in the market, the manufacturer or distributor may engage in various marketing
and advertising activities. They may also work with retailers to ensure that the SRP is being followed and
displayed prominently in stores. Retailers are often provided with promotional materials and point-of-
sale displays that highlight the SRP and encourage customers to compare it to the prices of competing
products.

In some cases, government regulations may also play a role in determining the SRP. For example, certain
products may have a minimum SRP set by the government to protect consumers from excessive price
hikes.

In general, the SRP is meant to serve as a benchmark for the price of a product, allowing consumers to
easily compare prices and make informed purchasing decisions. However, it is important to note that
the SRP is not necessarily the same as the actual price at which the product is sold, as retailers may offer
discounts or sales, and the price may fluctuate based on supply and demand.