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Unformatted text preview: 1625 1639 The following is an example of a response students might write: Dear Correct on Campus, Pick out your restaurantyour roommate will be buying your dinner . You are correct on all counts. Knowing the cost of baking the goods that the club will sell will help the club plan what to bake. If it is trying to minimize costs, the club would be most likely to bake the least costly items. But, if it knows the costs and selling prices of the baked items, and if it can estimate the customer demand for each item, the club most likely will bake more of the items with high contribution margins (if customer demand is high enough) or even items with low contribution margins and high customer demand. In other words, the club will bake and sell the items that will give it the highest profit. So, knowing the costs also will help the club decide how many of each type of baked goods it wants to sell. Knowing the costs of baking the goods also will help the company set the selling prices of the different baked goods. Of course, the club will want to set the selling price of each good at an amount greater than the cost of that particular baked good and at an amount that people will be willing to pay for each good. By using the costs of baking the goods in this way to plan what to bake, to decide how many of each type of baked goods it wants to sell, and to decide how much to charge for each item, your club should be able to make the largest profit. Enjoy your dinner , and save room for some baked goods! Sincerely , Dr . Decisive ...
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This note was uploaded on 04/08/2008 for the course ACC 102 taught by Professor Drucker during the Fall '07 term at Coastal Carolina University.
- Fall '07