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Current situation: Income Statements For the year ended 12/31/22 Company Cookie Cup Cake Number of customers 150 150 Sales revenue (SP = $160/unit) $24,000 $24,000
Current situation: Income Statements For the year ended 12/31/22 Company Cookie Cup Cake Number of customers 150 150 Sales revenue (SP = $160/unit) $24,000 $24,000 Variable cost: (VC= $0/u for Cookie and $90/unit for Cake O (13,500) Contribution margin Fixed cost (13,500) 0 Net income (loss) $10,500 $ 10,500 FUTURE SITUATION: Reconstruct the above if: a. Cookie lures all 150 customers away from Cup Cake by lowering its price to $85 per customer. Therefore, Cookie now has 300 customers and Cup Cake has none (1 pt) b. Cup Cake lures all 150 customers away from Cookie by lowering its price to $85 per customer. Therefore, Cup Cake now has 300 customers and Cookie has none (1 pt) Company Cookie Cup Cake (a.) (b.) Number of customers Sales revenue (SP = $160/unit) Variable cost: (VC= $0/u for Cookie and $90/unit for Cake) Contribution margin Fixed cost Net income (loss) C. The price-cutting strategy effect on the companies with explanation: (1 pt)
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