Question
The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Lancashire sold 1,000,000 cases last
The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Lancashire sold 1,000,000 cases last year to the following types of customers:
CUSTOMER | PRICE PER CASE | CASES SOLD |
Drugstore chains | $5.00 | 375,000 |
Gas station chains | $5.50 | 125,000 |
Supermarket chains | $6.50 | 500,000 |
Local pharmacies | $6.00 | 250,000 |
The drugstore chains have special handling costs of $0.20 a case and increased administrative assistance costing $45,000 per year. The gas station chains require special marketing promotions that cost $50,000. Sales commissions of 10% are paid. The supermarket chains order electronically through EDI which costs $25,000 annually. Lancashire is responsible for shipping costs, which totaled $0.50 a case and special labels costing $0.02 per bottle. Local pharmacies have special handling costs of $0.10 per case and sales commissions are paid to agents costing $0.25 per case. Bad debt expense averages 10% of sales. What is the profit per case for drugstore chains?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started