A Starbucks and Dunkin' compete for coffee customers on Cooper Street near UTA. Each can sell a large coffeefor either $1 or $2 with 60% of the price being profit. It is expected that 2000 large coffees will be bought by UTAstudents per month at the two coffee shops and 1000 per month by non-students. Students choose the shopwith the most inexpensive coffee if possible. If the prices are the same, students are equally likely to chooseeither coffee shop. Non-students are always equally likely to choose either coffee shop. The goal of the coffeeshops is to maximize profit for large coffees (and thereby all coffee, they hope). What are the PROFITS per monthfor both Starbucks and Dunkin' when Starbucks charges $1 and Dunkin' charges $2? It might be useful toconsider these profits as payoffs in a two-person game for the strategies ($1,$2).$1500 for Starbucks, $600 for Dunkin'O $2000 for Starbucks, $1000 for Dunkin'O $2500 for Starbucks, $1000 for Dunkin'$1200 for Starbuck, $600 for Dunkin'« PreviousNextSimpfun

Competitive Pricing is basically a strategy in which the pricing by the enterprise is on the basis…

Answered: A Starbucks and Dunkin' compete for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Freshly Farms plants 80 acres of Brussels sprouts every spring. Freshly sells its sprouts to a farmers cooperative, which sells them to a wholesaler, which sells them to retailers, which sells them to consumers. The farmers cooperative buys Freshly Brussels sprouts for $0.98 per pound. The cooperative takes a 16% margin on the cooperative's selling price. The wholesaler takes a 16% markup on the wholesaler's cost. The retailer takes a 15% margin on the retailer's selling price. How much does a consumer pay to the retailer for one pound of Freshly Farms Brussels sprouts? (Rounding: penny.) ANSWER IS: 1.59, but HOW is that the answer? Please explain.
Please answer all questions in their entirety. Please remember to use exact terminology and make the answers clear. The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Hooper $19.00 each with a minimum order of 180 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 180. Since Hooper’s plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $38.00 each. Hooper would pay the students a commission of $5.00 for…
Having recently graduated with a visual arts degree, Zane is considering starting a new business in this field, selling exotic artwork. He believes he can sell each piece of artwork for an average price of $600. The suppliers of the artwork will be paid a commission of 25% of the price. Artwork will be packed and delivered to the customer. Zane estimates that packing and delivery costs should be about $30 per product. There will be additional expenses associated with running the store. Rent will be $5,400 per month. Utilities (which it is assumed will not vary from month to month) will be $990 per month. Insurance and other expenses will be $750 per month. He plans to pay himself and one sales assistant salaries of $10,500 per month ($7,500 for himself and $3,000 for his assistant). The tax rate is assumed by Zane to be 30%. Required: a. Based on the information how many pieces of artwork per month would Zane need to sell to break even? Show all workings. b. If Zane wanted to earn a…
Hansaben
Rainbow Paints operates a chain of retail paint stores. Although the paint is sold under the Rainbow label, it is purchased from an independent paint manufacturer. Guy Walker, president of Rainbow Paints, is studying the advisability of opening another store. His estimates of monthly costs for the proposed location are as follows: Fixed costs: Occupancy costs Salaries Other Variable costs (including cost of paint) $6 per gallon Although Rainbow stores sell several different types of paint, monthly sales revenue consistently averages $10 per gallon sold. Required: a. Compute the contribution margin ratio and the break-even point in dollar sales and in gallons sold for the proposed store. c. Walker thinks that the proposed store will sell between 2,200 and 2,600 gallons of paint per month. Compute the amount of operating income that would be earned per month at each of these sales volumes. a. Contribution margin ratio a. Break-even sales volume in dollars a. Break-even sales volume in…
Franiuk Hotdogs and Grill normally sells hotdogs for $2.00 but also t-shirts with the name of the business and its logo prominently displayed for $10. The t-shirts haven't been selling that well lately, so Franiuk has decided to sell a combination of the t-shirt for $10 with a free hotdog. Donovan buys the combination of the t-shirt and the hotdog for $10 in cash. How should Franiuk account for the transaction? O Franiuk should recognize $10 revenue, comprised of $10 for the t-shirt, $2 for the hotdog, and $2 as a liability. Franiuk should recognize $12 revenue, comprised of $10 for the t-shirt, $2 for the hotdog, and $2 for discount expense. O Franiuk should recognize $10 revenue, comprised of $8.33 for the t-shirt, $1.67 for the hotdog. O Franiuk should recognize $10 revenue, comprised of $10 for the t-shirt, $0 for the hotdog.
A school purchasing manager is seeking to buy tablets from either Entity A or Entity B and will pay shipping costs. The purchase price is $500 each. Entity A purchases the tablets from the manufacturer, Banana Industries (for $400). Entity A has the tablets shipped to its distribution center in Denver, and then ships them to schools when a sale is made. Entity A at times offers discounts to schools in accordance with its marketing strategy. On the other hand, Entity B sells tablets from a variety of manufacturers including Banana Industries. When a sale is made, Entity B remits the proceeds to the manufacturer, and retains a 10% commission (here $50). Entity B has no discretion as to the sales price. The manufacturer then ship the equipment to the customer. For each arrangement, indicate how much revenue and gross profit should be recognized. Provide support for your answer from the ASC and cite the applicable provisions. You should cite like this: ASC 606-10-35-3(e) so we can find…
The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Hooper $18.00 each with a minimum order of 174 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 174. Since Hooper’s plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $36.00 each. Hooper would pay the students a commission of $5.00 for each shirt sold. Required: 1.What level of unit sales and dollar sales is needed to attain a target profit of $9,048? 2.…
Trask Inc. and Vice Inc. are two small clothing companies that are considering leasing a dyeing machine together. The companies estimated that in order to meet production, Trask needs the machine for 1,000 hours and Vice needs it for 750 hours. If each company rents the machine on its own, the fee will be $90 per hour of usage. If they rent the machine together, the fee will decrease to $85 per hour of usage. Read the requirements Requirement 1, Calculate Trask's and Vice's respective share of fees under the stand-alone cost-allocation method. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar) Incremental Trask primary user Vice primary user Trask Stand-alone Requirement 2. Calculate Trask's and Vice's respective share of fees using the incremental cost-allocation method assuming (a) Trask ranked as the primary party and (b) Vice ranked as the primary party. (Do not round intermediary calculations. Only round the amount you input…
Ashvin
Assume you decide to sell printed T-shirts for $12 each. Your research suggests you can buy plain T-shirts for $5 each. Printing would entail a front-end, fixed fee of $120 for the screen and another $0.75 per printed T-shirt. Your initial advertisement yields orders for 100 T-shirts. You then invest $900 in the venture, purchase plain T-shirts and the screen, and get the T-shirts printed (suppliers require you pay for all expenses in cash). By the end of your first week in business, all T-shirts are ready for sale. Customers with orders totaling 50 T-shirts pick up their T-shirts in that first week. But, of the 50 T-shirts picked up, only 25 are paid for in cash. For the other 25, you agree to accept payment next week. Using accrual accounting, what is inventory at the end of the first week?
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