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help please and if you can add an explanation for me to study that would be great. Question 1: Making a decision You operate a
help please and if you can add an explanation for me to study that would be great.
Question 1: Making a decision You operate a lemonade stand. The wholesale cost of lemonade is $0.50 per unit. The cost of rent for the stand is $40 per day. You need to choose your pricing and advert strategy. You are considering three alternatives: A: If you set the selling price to $1.50 per unit and spend $0 on advertising, you will sell 120 units per day B: If you reduce the selling price to $1.20 per unit and spend $0 on advertising, you will sell 180 units per day C: If you set the selling price to $1.50 per unit and spend $30 per day on advertising, you will sell 180 units per day. a) Compute revenue, costs, and profit per day for each alternative. B Revenue Costs: Lemonade (wholesale) Rent Advertising Profit b) which alternative should you choose? OB c) Is rent a relevant cost? OYES (the cost differs across alternatives; it should not be ignored) ONO (the cost is the same for all three alternatives; it can be ignored) d) Is advertising a relevant cost? O YES (the cost differs across alternatives; it should not be ignored) A: If you set the selling price to $1.50 per unit and spend $0 on advertising, you will sell 120 units per day. B: If you reduce the selling price to $1.20 per unit and spend $0 on advertising, you will sell 180 units per day. C: If you set the selling price to $1.50 per unit and spend $30 per day on advertising, you will sell 180 units per day. a) Compute revenue, costs, and profit per day for each alternative. B Revenue Costs: Lemonade (wholesale) Rent Advertising Profit b) Which alternative should you choose? OA B c) Is rent a relevant cost? YES (the cost differs across alternatives; it should not be ignored) ONO (the cost is the same for all three alternatives; it can be ignored) d) Is advertising a relevant cost? YES (the cost differs across alternatives; it should not be ignored) O NO (the cost is the same for all three alternatives; it can be ignored) Step by Step Solution
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