QUESTION 2 Cafe X is selling coffee in three different sizes at the prices and costs shown in the first table below. As shown in the second table, they are considering raising the price of their small to $2.75, and they project that sales of smalls will go down while sales of mediums and larges will go up slightly. Fill out the tables below to calculate the projected change in gross margin based on the estimated changes in cups sold. You may find it helpful to use a spreadsheet for the calculations. Current Prices Cost Price per Cups Sold Revenue COGS Gross Margin per Cup Cup $ 2$ 2$ Small $2.50 $0.20 2,400 %2$ Medium $3.50 $0.35 1,400 2$ 24 2$ Large $4.50 $0.50 700 $ $ %24 Total Increased Price for Small Coffee Price Cost Est. Change in Cups Sold with Small @ $2.75 Gross per per Cups Sold Revenue COGS Margin Cup Cup 2$ 24 Small $2.75 $0.20 -10% $ Medium $3.50 $0.35 +6% $ $ Large $4.50 $0.50 +3% $ $ 24 Total Change in Gross Margin (positive number for increase, negative for decrease): $ 0

QUESTION 2 Cafe X is selling coffee in three different sizes at the prices and costs shown in the first table below. As shown in the second table, they are considering raising the price of their small to $2.75, and they project that sales of smalls will go down while sales of mediums and larges will go up slightly. Fill out the tables below to calculate the projected change in gross margin based on the estimated changes in cups sold. You may find it helpful to use a spreadsheet for the calculations. Current Prices Cost Price per Cups Sold Revenue COGS Gross Margin per Cup Cup $ 2$ 2$ Small $2.50 $0.20 2,400 %2$ Medium $3.50 $0.35 1,400 2$ 24 2$ Large $4.50 $0.50 700 $ $ %24 Total Increased Price for Small Coffee Price Cost Est. Change in Cups Sold with Small @ $2.75 Gross per per Cups Sold Revenue COGS Margin Cup Cup 2$ 24 Small $2.75 $0.20 -10% $ Medium $3.50 $0.35 +6% $ $ Large $4.50 $0.50 +3% $ $ 24 Total Change in Gross Margin (positive number for increase, negative for decrease): $ 0

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 5CE: Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and...

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