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2). Determining the profit Maximizing price Elite Kitchenware has come out with a new line of dishes that it plans to test market through a series of...
2). Determining the profit Maximizing priceElite Kitchenware has come out with a new line of dishes that it plans to test market through a series of demonstrations at the local mall throughout the month of August. If the demonstrations result in enough sales, then the program will be expanded to other malls in the region. The cost of the demonstrations is a flat fee of $1,000 to the mall owner/operator and a commission of 25% of revenue to the person giving the demonstrations (the demonstrator will not receive any salary beyond this commission).Elite Kitchenware’s fixed costs of producing the dishes are $5000 per production run. The company plans to wait for all orders to come in, and then it will produce exactly the number of units ordered (there will be no beginning or ending inventory). Variable production costs are $15 per set of dishes. In addition it will cost approximately $10 per set to ship the dishes to customers.Beverly Slater, a product manger at Elite Kitchenware, is charged with recommending a price for the items. Based on her experience with similar items, focus group responses, and survey information, she has estimated the number of units that can be sold at various prices.Price Quantity$69.99 30059.99 50049.99 65039.99 80029.99 1,000Questionsa. Calculate expected profit for each price.b. Which price maximizes company profit?"1). Joint Costs and Additional ProcessingGood Earth Products produces orange juice and candied orange peels. A 1,000-pound batch of oranges, costing $400, is transformed using labor of $40 into 100 pounds of orange peels and 300 pints of juice. The company has determined that the sales value of 100 pounds of peels at the split-off point is $300and the value of a pint of juice (not pasteurized or bottled) is $0.30. Beyond the split-off point, the cost of sugar-coating and packaging and the 100 pounds of peels is $50. The cost of pasteurizing and packaging the 300 pints of juice is $150. A 100 pound box of candied peels is sold to commercial baking companies for $500. Each pint of juice is sold for $1.QuestionsA. Allocate joint costs using the relative sales values at the split-off point and calculate the profit per 100 pound box of sugar coated peels and the profit per pint of juice.B. What is the incremental benefit (cost) to the company of sugar coating the peels rather than selling them in their condition at the split-off point?C. What is the incremental benefit (cost) to the company of pasteurizing and packaging a pint of juice rather than selling the juice at the split-off point?
