Question
During a typical week, Cyrils Supermarket sells 2,000 pounds of a food item unprepared (raw) for $1.99 per pound. The variable cost of the unprepared
During a typical week, Cyrils Supermarket sells 2,000 pounds of a food item unprepared (raw) for $1.99 per pound. The variable cost of the unprepared (raw) product is $0.95 per pound. Cyril is considering whether to cook the product and sell it in his deli department for $6.79 per pound. The variable cost to cook the 2,000 pounds of food in the deli is $8,400 total. Fixed costs are not affected. If Cyril cooks the raw product, he will lose 7% of the product per week in the preparation process.
1. Calculate the increase or decrease in Cyrils net income per week if he cooks the product and sells it in the deli for $6.79 per pound (round to nearest $1).
2. Refer to the data in problem 4 above. Calculate the cooked (prepared) food price (revenue) per pound that would increase Cyrils net income $1,000 per week. (round to $0.00).
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