Product Pricing: Two Products

Assume Spindrift Beverage Co$.$ manufactures two products, flavored water and carbonated water, both on the same assembly lines and packaged $30$ cans per pack. The predicted sales are $150,000$ packs of flavored water and $500,000$ packs of carbonated water. The predicted costs for the year are as follows.

Variable Costs Fixed Costs

Materials $$200,000$ $$500,000$

Other $$250,000$ $$800,000$

Flavored water uses $25\%$ of the materials costs and $10\%$ of the other costs. Carbonated water uses $75\%$ of the materials costs and $90\%$ of the other costs. The management of Spindrift desires an annual profit of $$450,000.$

$($a$)$ What price should Spindrift charge for each pack if management believes the carbonated water. sells for twice the price of flavored water? Round answers to the nearest cent.

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$($b$)$ What is the total profit per product using the selling prices determined in part $($a$)?$ Use negative signs with answers, if appropriate.

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DVDs $