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Calculate the minimum acceptable price per cone

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Reference no: EM132568535

The Sweet Cone sells ice cones in a variety of flavours. Data for a recent week are as follows.

Revenue (1,000 cones @ $1.50) Cost of ingredients (1,000 cones) Rent

Store attendant  $1,500 530

Income before tax  300 600 $ 70

The Sweet Cone's manager received a call from a university student club requesting a bid on 100 cones to be picked up in three days. The cones could be produced in advance by the store attendant during slack periods and then stored in the freezer. Each cone requires a special plastic cover that costs $0.05.

Required:

Show ALL your workings.

Question 1: Calculate the minimum acceptable price per cone for this special order.

Question 2: Explain why the Sweet Cone's manager might be willing to sell cones at the price you calculated in part (i).

Reference no: EM132568535

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