Reference no: EM131582125

Question: With an original goal of selling fresh apples from the family orchard at a roadside stand, Deer Valley Organics has become a unique operation featuring a wide variety of locally grown organic produce and farm products that include their own fruit as well as products from the area's finest growers. A number of different products are available, including apples, strawberries, and raspberries as either prepackaged or pick your own; assorted fresh vegetables; ciders, jams, and jellies; and organic fresh eggs and free-range chicken whole fryers. Prepackaged apples are still the mainstay of the business, and after adding all production and labor costs, Deer Valley determined that the cost of these apples was 64 cents per pound.

1. What would be the selling price per pound for the prepackaged apples using a 30% markup based on cost? A 40% markup? A 50% markup?

2. Based on the national average for apples sold on a retail basis, Deer Creek sets a target price of
$1.10 per pound for the prepackaged apples. Using this selling price, compute the percent of markup based on costfor the prepackaged apples. Then, compute the percent of markup based on selling price.

3. Deer Valley allows customers to pick their own apples for $8 a bag, which works out to approximately 47 cents per pound. How is that possible given the cost data in the introductory paragraph? Would the orchard be losing money? Explain.

4. Deer Valley receives a delivery of 1,250 lb of tomatoes from a local supplier, for which they pay 18 cents per pound. Normally, 6% of the tomatoes will be discarded because of appearance or spoilage. Find the selling price needed per pound to obtain a 120% markup based on cost.