Question

A local vendor at the county fair sells snow cones for $.50 each. When 250 snow cones are sold, each snow cone is estimated to have $.10 in variable costs and $.15 in fixed costs. A local school group plans on attending the fair next week and wishes to purchase 50 snowcones for $.25 each. The vendor can sell as many as 400 snowcones per day. What is the minimum price the vendor should charge for the snowcones? O$.50 O$ 25 $ .10 O$.75

Answer 1

If the special order were accepted, net income would increase by $7.50
Statement showing computations
Particulars	Amount
No of units in special order	50.00
Sales price per unit	0.25
Sales value	12.50
Variable Costs = 50*.10	5.00
Contribution or income from Special order= 12.50-5	7.50
Note: fixed costs remain same and would not be affected by special order