Answer:
1. $2,185
2. Percentage increase 14%. Sales decrease -22%
3. $1,805
4. -17.4%
Explanation:
1. In calculating the profit for the first week we will simply deduct the costs from the sales.
= Sales - Fixed Costs - Variable costs
= (1,800 cones * 3.5) - 2,675 - ( 1,800 cones * 0.8)
= 6,300 - 2,675 - 1,440
= $2,185
$2,185 is her profit for the first week.
2. Percentage increase in selling price will be,
= 4-3.5/3.5 * 100%
= 14%
Percentage decrease in sales
= 1,400 - 1,800 / 1,800 * 100%
= -22%
3. Using the first questions method we have,
= (1,400 * 4) - 2,675 - (1,400 * 0.8)
= 5,600 - 2,675 - 1,120
= $1,805
$1,805 is her profit for the second week.
4. Decrease in profit
= $1,805 - $2,185 / 2,185 * 100%
= -17.4%
Maria Lorenzi suffered a decrease in profit of -17.4% as a result of raising her prices by 14%.
