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In addition to flowers and plants, Fannies Florist sells candy bouquets. Fannie currently buys candy bouquets from a local distributor for $8 each and sells
- In addition to flowers and plants, Fannies Florist sells candy bouquets. Fannie currently buys candy bouquets from a local distributor for $8 each and sells the bouquets for $10 each. She sells 300 candy bouquets per month for eight months of the year, 500 bouquets per month for three months, and about 1,000 bouquets during February around Valentines Day. Her daughter has suggested that they could produce their own candy bouquets. After investigating the costs, they discovered that candy will cost them an average of $1 per candy bouquet. In addition, it will cost about $3 per candy bouquet to pay people to assemble the candy bouquet. Also, it will cost $2,000 per month to rent a building to store and produce the candy bouquets.
What is the annual net cost of buying candy bouquets from the distributor?
What is the annual net cost of making the candy bouquets themselves?
Should Fannies Florist produce or buy the candy bouquets?
Are the selling price and total revenue received from customers relevant to this decision?
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