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Whitepunk [10]
3 years ago
12

Product Pricing: Single Product Assume that you plan to open a soft ice cream franchise in a resort community during the summer

months. Fixed operating costs for the three- month period are projected to be $5,650. Variable costs per serving include the cost of the ice cream and cone, $0.50, and a franchise fee payable to Austrian Ice, AG, $0.15. A market analysis prepared by the Austrian Ice indicates that the summer sales in the resort community should total 24,000.
Required: Determine the price should charge for each ice cream cone to achieve a $20,000 profit for the three-month period.
Business
1 answer:
Rasek [7]3 years ago
8 0

Answer:

$1.71

Explanation:

The computation of sales per unit is shown below:-

Variable cost = Total units × (Cost of ice cream and cone + Franchise fee payable)

= 24,000 × ($0.50 + $0.15)

= 24,000 × $0.65

= $15,600

Total cost = Fixed cost + Variable cost

= $5,650 + $15,600

= $21,250

Sales = Total cost + Profit

= $21,250 + $20,000

= $41,250

Sales price per unit = Sales ÷ Community total

= $41,250 ÷ 24,000

= $1.71

You might be interested in
The following data are for Lily Kay Company. Total sales revenue $250,000 Number of units sold 50,000 units Contribution margin
eduard

Answer:

b. 51,429 units

Explanation:

If x = Number of units

Net Income = Sales Revenue - Variable Cost - Fixed Cost

or

Net Income = Contribution Margin - Fixed Cost

where,

Net Income = $80,000

Contribution Margin per unit = $3.50

Fixed Cost = $100,000

Contribution Margin = Net Income + Fixed Cost

$3.50x = $80,000 + $100,000

$3.50x = $180,000

Dividing the above equation by $3.50 we get

x = $180,000 / $3.50

x = 51,429 units

Hence 51,429 number of units must be sold to generate the net income of $80,000.

3 0
2 years ago
Robert Necco and Nelson Packard are economists at Economic Research Associates. ERA asks Necco and Packard for their opinions ab
Lorico [155]

Answer: B) Correct Incorrect

Explanation:

Whilst it was generally believed at some point that raising taxes and Government Spending by the same amount would have no effect, research has disproven this thought.

This is because it was shown that an increase in Government Spending leads to a larger increase in GDP than an increase in taxes reduces it.

This is because when the Government spends money, the Multiplier effect of Government Spending is always 1 more than that of the Taxes therefore raising taxes and spending by the same amounts still increases the Real GDP because Government Spending will create more income than taxes will take.

Necco is right, Packard is wrong.

8 0
3 years ago
Greg Downs recently has noticed that the plant he is managing is delivering only 30 percent of its products on time. To determin
strojnjashka [21]

Answer:

democratic/participative

Explanation:

Democratic leadership is also called participative leadership. In this type of leadership the supreme leader involves group member in decision making process. This foster participation, exchange of ideas which generates collective intelligence. it helps in not only making better decision making but also generates employee satisfaction by generating feeling of sense of belongingness.

4 0
3 years ago
. The current spot exchange rate is $1.50/€ and the three-month forward rate is $1.55/€. Based on your analysis of the exchange
Andre45 [30]

Answer:

B) Buy €1,000,000 forward for $1.55/€.

Explanation:

To calculate the expected profit consider the following data and formula:

Amount in actions: 1.000.000

Spot exchange rate: 1.62

Three month forward calculation: 1.55

Expected profit=1,000, 000 *( 1.62 - 1.55) = 70,000.00.

6 0
3 years ago
Entries for Investment in Bonds, Interest, and Sale of Bonds Gonzalez Company acquired $200,000 of Walker Co., 6% bonds on May 1
drek231 [11]

Answer:

A. Dr Investment in Bonds 200,000

Cr Cash 200,000

B. Dr Cash 6,000

Cr Interest revenue 6,000

C. Dr Cash 67,900

Dr Loss on sale of bonds 2,100

D. Dr Interest receivable 1,300

Cr Interest revenue 1,300

Explanation:

A. Preparation of the Journal entry to record The initial acquisition of the bonds on May 1

Dr Investment in Bonds 200,000

Cr Cash 200,000

B. Preparation of the journal entry to Record The semiannual interest received on November 1 Nov

Dr Cash 6,000

[ 200,000 (100%-97%)

Cr Interest revenue 6,000

C. Preparation of the journal entry to Record The sale of the bonds on November 1.

Dr Cash 67,900

( 70,000 * 97%)

Dr Loss on sale of bonds 2,100

(70,000-67,900)

Cr Investment in Bonds 70,000

D. Preparation of the journal entry to Record

The accrual of $1,300 interest on December 31. Dec. 31

Dr Interest receivable 1,300

Cr Interest revenue 1,300

6 0
2 years ago
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