Solution
Answer | |
Cost of ingredient | Relevant |
Rent | Irrelevant |
Store attendent | Irrelevant |
Special plastic cover | Relevant |
.
Minimum price = $513.07
Working
Cost of ingredient | $ 513.00 |
Rent | $ - |
Store attendent | |
Special plastic cover | $ 0.07 |
Total relevant cost per cone | $ 513.07 |
Only relevant cost will be considered when calculating minimum price.
The Vaughn House sells ice cream cones in a variety of flavours. Data for a recent...
Lickety Split sells ice cream cones in a variety of flavours. The following are data for a recent week: Revenue (1,000 cones at $1.75 each) $1,750 Cost of ingredients $640 Rent 500 Store attendant 600 1,740 Pretax income $10 The manager estimates that if she were to increase the price of cones from $1.75 to $1.93 each, weekly volume would be cut to 850 cones due to competition from other nearby ice cream shops. Estimate the profit-maximizing price per cone....