Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Professionals Handbook Of Financial Risk Management

Authors: Lev Borodovsky, Marc Lore

1st Edition

0750641118, 978-0750641111

More Books

Students also viewed these Finance questions

Question

11.2 Investigate the importance of knowing your audience

Answered: 1 week ago

Question

What are the stages of project management? Write it in items.

Answered: 1 week ago

Question

why do consumers often fail to seek out higher yields on deposits ?

Answered: 1 week ago

Question

1. Which position would you take?

Answered: 1 week ago