What is the cost for the first cake? What cost would not be included in the second cake? What is the cost of the second cake? What would be the total cost of this order if the offer was ассepted? How much profit will Sara be recording for this special order? If your company policy is to always have a 15% profit on al order, would you still accept this order? If you would not accept the order, what price would | negotiate? you

What is the cost for the first cake? What cost would not be included in the second cake? What is the cost of the second cake? What would be the total cost of this order if the offer was ассepted? How much profit will Sara be recording for this special order? If your company policy is to always have a 15% profit on al order, would you still accept this order? If you would not accept the order, what price would | negotiate? you

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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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

Sara makes wedding cakes from her home. A
customer has requested two duplicate wedding
One Cake
$ 50
cakes: one for the wedding and one to be frozen
for their anniversary. The couple has offered $400
for both cakes instead of $500 ($250 each). The
Direct materials
Direct labor
100
Variable overhead
25
Fixed overhead
10
cost information to make one cake is shown.
What is the cost for the first cake?
What cost would not be included in the second cake?
What is the cost of the second cake?
What would be the total cost of this order if the offer was
аcсepted?
How much profit will Sara be recording for this special
order?
If your company policy is to always have a 15% profit on all
order, would you still accept this order?
If you would not accept the order, what price would you
negotiate?

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Hawk Airways is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how to price its round-trip tickets. The market research group at Hawk Airways segments the market into business and pleasure travelers. It provides the following information on the effects of two different prices on the number of seats expected to be sold and the variable cost per ticket, including the commission paid to travel agents: (Click the icon to view the pricing and ticket information.) Pleasure travelers start their travel during one week, spend at least one weekend at their destination, and return the following week or thereafter. Business travelers usually start and complete their travel within the same work week. They do not stay over weekends. Assume that round-trip fuel costs are fixed costs of $24,000 and that fixed costs allocated to the round-trip flight for airplane-lease costs, ground services, and flight-crew salaries total $188,000. Read the requirements.…
Ellie now had two offers to think about. Her initial reaction was to turn down the special request for 25,000 brochures at $10 per 100. Especially as she did not believe Tyco would realize any repeat or future business from the customer. She also needed to understand her costs versus the cost offered by the small shop to increase Tyco's printing capacity by outsourcing. Should she tell the small shop about the special order request and let them work it out themselves? They might both get what they needed.
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Part 1: Use the Value per Products Description bar chart.1. Which product has the highest profit value?2. What is the profit value for the product with the highest profit value?3. Do any of the products have a negative profit value (the company is losing money on them)?4. If there are products with a negative profit value, which products are those?5. Do you think the company should keep selling the “Shirt Girls (pink)” product? Why or whynot?