3310solmod07

3310solmod07 - Module 7 Answers 3-38. (30 min.) Pricing...

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Module 7 Answers 3-38. (30 min.) Pricing Decisions: Jen & Barry’s. a. Status Quo 20,000 quarts Alternative 20,400 quarts Difference Sales revenue . .............. $60,000 a $60,900 b $900 (higher) Less variable costs: Materials. ..................... 20,000 20,400 400 (higher) Labor. .......................... 10,000 10,200 200 (higher) Variable overhead . ...... 5,000 5,100 100 (higher) Total variable cost. .... $35,000 $35,700 $700 (higher) Contribution margin . ...... $25,000 $25,200 $200 (higher) Less fixed costs. ............ 20,000 20,000 0 (higher) Operating profit. ............. $ 5,000 $ 5,200 $200 (higher) Operating profits would be higher with the additional order by $200. a $60,000 = 20,000 quarts x $3.00 per quart b $60,900 = (20,000 quarts x $3.00 per quart) + (400 quarts x $2.25 per quart) b. The lowest price the ice cream could be sold without reducing profits is $1.75 per quart, which would just cover the variable costs of the ice cream.
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3310solmod07 - Module 7 Answers 3-38. (30 min.) Pricing...

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