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Product Pricing: Two Products Assume Spindrift Beverage Co. manufactures two products, flavored water and carbonated water, both on the same assembly lines and packaged 30 cans per pack. The predicted sales are 150,000 packs of flavored water and 500,000 packs of carbonated water. The predicted costs for the year are as follows. Materials Other Variable Costs Fixed Costs $100,000 $600,000 250,000 900,000 Flavored water uses 25% of the materials costs and 10% of the other costs. Carbonated water uses 75% of the materials costs and 90% of the other costs. The management of Spindrift desires an annual profit of $450,000. (a) What price should Spindrift charge for each pack if management believes the carbonated water sells for 20 percent more than the price of flavored water? Round answers to the nearest cent. Flavored water $ Carbonated water $ (b) What is the total profit per product using the selling prices determined in part (a)? Use negative signs with answers, if appropriate. Flavored water $ Carbonated water $

Product Pricing: Two Products Assume Spindrift Beverage Co. manufactures two products, flavored water and carbonated water, both on the same assembly lines and packaged 30 cans per pack. The predicted sales are 150,000 packs of flavored water and 500,000 packs of carbonated water. The predicted costs for the year are as follows. Materials Other Variable Costs Fixed Costs $100,000 $600,000 250,000 900,000 Flavored water uses 25% of the materials costs and 10% of the other costs. Carbonated water uses 75% of the materials costs and 90% of the other costs. The management of Spindrift desires an annual profit of $450,000. (a) What price should Spindrift charge for each pack if management believes the carbonated water sells for 20 percent more than the price of flavored water? Round answers to the nearest cent. Flavored water $ Carbonated water $ (b) What is the total profit per product using the selling prices determined in part (a)? Use negative signs with answers, if appropriate. Flavored water $ Carbonated water $

FINANCIAL ACCOUNTING
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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Product Pricing: Two Products Assume Spindrift Beverage Co. manufactures two products, flavored water and carbonated water, both on the same assembly lines and packaged 30 cans per pack. The predicted sales are 150,000 packs of flavored water and 500,000 packs of carbonated water. The predicted costs for the year are as follows. Variable Costs Fixed Costs $100,000 $600,000 250,000 900,000 Materials Other Flavored water uses 25% of the materials costs and 10% of the other costs. Carbonated water uses 75% of the materials costs and 90% of the other costs. The management of Spindrift desires an annual profit of $450,000. (a) What price should Spindrift charge for each pack if management believes the carbonated water sells for 20 percent more than the price of flavored water? Round answers to the nearest cent. Flavored water $ Carbonated water $ (b) What is the total profit per product using the selling prices determined in part (a)? Use negative signs with answers, if appropriate. Flavored water $ Carbonated water $
Transcribed Image Text:Product Pricing: Two Products Assume Spindrift Beverage Co. manufactures two products, flavored water and carbonated water, both on the same assembly lines and packaged 30 cans per pack. The predicted sales are 150,000 packs of flavored water and 500,000 packs of carbonated water. The predicted costs for the year are as follows. Variable Costs Fixed Costs $100,000 $600,000 250,000 900,000 Materials Other Flavored water uses 25% of the materials costs and 10% of the other costs. Carbonated water uses 75% of the materials costs and 90% of the other costs. The management of Spindrift desires an annual profit of $450,000. (a) What price should Spindrift charge for each pack if management believes the carbonated water sells for 20 percent more than the price of flavored water? Round answers to the nearest cent. Flavored water $ Carbonated water $ (b) What is the total profit per product using the selling prices determined in part (a)? Use negative signs with answers, if appropriate. Flavored water $ Carbonated water $
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