Question
A nutrition and supplement store buys Quest nutrition bars for $2.10 per bar and sells them for $2.79 per bar. It sells an average of
A nutrition and supplement store buys Quest nutrition bars for $2.10 per bar and sells them for $2.79 per bar. It sells an average of 150 bars per day. By tracking past changes in sales of nutrition bars with changes in sales of other nutrition products, the manager has discovered that each one-bar increase in the sales of Quest nutrition bars, is associated with a $1.00 increase in the sales of other nutrition products. Every $1.00 increase in the sales of other nutrition products yields a contribution margin of $0.38.
a) The manager is now considering a promotion where the price of Quest nutrition bars be lowered to $2.59 per bar. If this past relationship between sales of Quest nutrition bars and sales of other nutrition products holds, how many Quest nutrition bars be sold to break even on this price promotion? Show your work.
b) If they expect to sell an additional 80 Quest nutrition bars, should they proceed with the above-proposed price change? Explain.
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