
MANAGERIAL ACCOUNTING W/ACCESS >IP<
16th Edition
ISBN: 9781259753961
Author: Garrison
Publisher: MCG CUSTOM
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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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Chapter AB Solutions
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