Pick-Me-Up Company is introducing a new high caffeine coffee in its stores and must decide what price to set for the coffee beans. An estimated demand schedule for the product is as follows: Price 1 Lb. units demanded $4.50 87,500 $5.00 75,500 $5.50 57,200 $6.00 47,800 $6.50 35,700 $7.00 26,300 Estimated costs are as follows: Variable manufacturing costs per unit $1.50 Fixed manufacturing cost per year $40,900 Variable selling & administrative costs per unit $0.50 Fixed selling & administrative costs per year $21,600 Prepare a schedule showing management the total revenue, total cost, and total profit or loss for each selling price. At what price do you recommend Pick-Me-Up Company should choose.
Pick-Me-Up Company is introducing a new high caffeine coffee in its stores and must decide what price to set for the coffee beans. An estimated demand schedule for the product is as follows: Price 1 Lb. units demanded $4.50 87,500 $5.00 75,500 $5.50 57,200 $6.00 47,800 $6.50 35,700 $7.00 26,300 Estimated costs are as follows: Variable manufacturing costs per unit $1.50 Fixed manufacturing cost per year $40,900 Variable selling & administrative costs per unit $0.50 Fixed selling & administrative costs per year $21,600 Prepare a schedule showing management the total revenue, total cost, and total profit or loss for each selling price. At what price do you recommend Pick-Me-Up Company should choose.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 40E
Related questions
Question
Pick-Me-Up Company is introducing a new high caffeine coffee in its stores and must decide what price to set for the coffee beans. An estimated demand schedule for the product is as follows:
Price | 1 Lb. units demanded |
---|---|
$4.50 | 87,500 |
$5.00 | 75,500 |
$5.50 | 57,200 |
$6.00 | 47,800 |
$6.50 | 35,700 |
$7.00 | 26,300 |
Estimated costs are as follows:
Variable |
$1.50 |
---|---|
Fixed manufacturing cost per year | $40,900 |
Variable selling & administrative costs per unit | $0.50 |
Fixed selling & administrative costs per year | $21,600 |
Prepare a schedule showing management the total revenue, total cost, and total profit or loss for each selling price.
At what price do you recommend Pick-Me-Up Company should choose.
Price | Demand | Total Revenue | Variable Costs | Fixed Costs | Total Costs | Total Profit (Loss) |
---|---|---|---|---|---|---|
$4.50 | ||||||
$5.00 | ||||||
$5.50 | ||||||
$6.00 | ||||||
$6.50 | ||||||
$7.00 |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College