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svp [43]
4 years ago
9

A company produces 1,000 packages of chicken feed per month. The sales price is $4.00 per pack. Variable cost is $1.50 per unit,

and fixed costs are $1,700 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.50 to $1.90 per unit, and fixed costs will increase by 20%. The company will price the new product at $5 per pack. How will this affect operating income? (Hint: Compare the increase in revenue to the increase in cost.)
Business
1 answer:
OlgaM077 [116]4 years ago
7 0

Answer:

It is more profitable to add the vitamin and sell the product for $5. Income will increase by $260

Explanation:

Giving the following information:

The number of units= 1,000 packages

Actual:

Selling price= $4.00 per pack.

Variable cost is $1.50 per unit

Fixed costs are $1,700 per month.

New option:

Selling price= $5

Variable cost= $1.9

Fixed costs= $2,040

We need to calculate the net income of both options, and choose the more profitable one:

Actual:

Net income= 1,000*(4-1.5) - 1,700= $800

New:

Net income= 1,000*(5 - 1.9)- 2,040= $1,060

It is more profitable to add the vitamin and sell the product for $5.

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Sphinxa [80]

Answer:

I don’t know that I would call them methods - a better word might be behaviors. And I don’t know if I can come up with ten.

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3 years ago
You are the founder of Shadow Skateboards, and you are considering methods of gaining and sustaining a competitive advantage. Wh
bogdanovich [222]

Answer:

The correct option is A,devoting resources to researching and developing new products that will be more durable than competitors'

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Creating sustainable advantage means that the company is able to do something very difficult for competitors to copy.

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Answer:

The correct ways to prepare a customer's change over the counter are:

Explanation:

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