Question

Pedro sells port wine for $32 per bottle. His fixed costs are $769. Variable costs are $15 per bottle. Lori approaches Pedro about creating a special wine for her daughter's upcoming wedding. Lori will buy 50 bottles of Pedro's wine, but the order will have fixed costs for special labeling and delivery of $300. Pedro wants to go into the negotiations with Lori knowing the minimum price he can charge per bottle and not lose money on the order. What is that minimum price

Answer 1

Answer:

$17

Explanation:

Calculation for that minimum price

Sales of port wine $32 per bottle

Less Variable costs ($15 per bottle)

Minimum price $17

($32-$15)

Therefore that minimum price is $17