In the first half of 2013, McDonalds bought and stockpiled about 50 million frozen chicken wings for a promotion it was planning for fall 2013. In the fall 2013, McDonalds debuted Mighty Wings, a menu item that would be available only through the end of November 2013. When Mighty Wings came out, McDonalds did not sell as many as it had planned. The main issue seemed to be the pricing of the wings; McDonalds priced the wings higher than its competitors. The pricing for Mighty Wings was $3.69 for three wings, $5.59 for five wings, and $9.69 for ten wings. As of the middle of December 2013, McDonalds has about 10 million pounds of the frozen chicken wings in storage and the Mighty Wings promotion is completed. Now McDonalds is making plans for how to best get rid of this stockpile of wings.

Questions:

1. Assuming that McDonalds paid $1.20 per pound for the frozen chicken wings, what is its cost of the 10 million pounds of frozen chicken wings in inventory?

2. The average chicken wing weighs 29 grams, which means that there are about 15 wings in a pound. What is the cost per wing in McDonalds inventory?

3. Should McDonalds cost of the leftover chicken wings heavily influence what course of action McDonalds should take to get rid of the wings? Why or why not? What type of cost is the original cost of the chicken wings?

4. The Wall Street Journal reports that McDonalds expects to reintroduce the Mighty Wings with new pricing of $2.99 for three wings. How much will McDonalds make per three-wing order when comparing the sales price to its cost per chicken wing as calculated previously?