Profitability: The profitability also known as the return on sales represents the net profit earned as a percentage of the total turnover. Relative profitability: Relative profitability of a business and its products/services is a measure of analysing its profits and earnings as compared to the expenses it is incurring. Absolute profitability: The profitability that measures the impact of adding or leaving a particular business segment such a products, customers on the company’s overall profit earning capacity is known as absolute profitability. With reference to the information given in the question, answer the following questions − Determine the reservations which should be cancelled if the sole objective of the business is to maximise profits. As per (1), determine the total profits earned. Assuming that it won’t be possible for Luxus Bakery to change the pricing of the wedding cakes, recommend the prices at which cakes should be sold in future. Give some creative ideas to be followed by Ms. Therau to keep both the customers and Regina happy while increasing the profits.

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Chapter AB, Problem 7P

To determine

Profitability: The profitability also known as the return on sales represents the net profit earned as a percentage of the total turnover.

Relative profitability: Relative profitability of a business and its products/services is a measure of analysing its profits and earnings as compared to the expenses it is incurring.

Absolute profitability: The profitability that measures the impact of adding or leaving a particular business segment such a products, customers on the company’s overall profit earning capacity is known as absolute profitability.

With reference to the information given in the question, answer the following questions −

Determine the reservations which should be cancelled if the sole objective of the business is to maximise profits.

As per (1), determine the total profits earned.

Assuming that it won’t be possible for Luxus Bakery to change the pricing of the wedding cakes, recommend the prices at which cakes should be sold in future.

Give some creative ideas to be followed by Ms. Therau to keep both the customers and Regina happy while increasing the profits.

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