Answered step by step
Verified Expert Solution
Question
1 Approved Answer
What is a good response to the statement below that includes: How consumers might react to the new higher prices and Nonfinancial considerations that businesses
What is a good response to the statement below that includes: How consumers might react to the new higher prices and
Nonfinancial considerations that businesses use to retain customers
- The cost volume profit relationships restaurants should consider the impact of price increase on the amounts of units sold. If there's a decrease in the amount of units sold after the price increase, then it will reduce the profitability of the firm. The impact of fixed cost on the break even amounts of unit sold should also be considered. The higher the fixed cost, the higher the break even point will be. The lower the fixed cost, the lower the break even point is. The break even point is the point in which there is no profit or no loss. To increase the break even point, you would need to lower the contribution margin per unit and to lower the break even point you must raise the contribution margin per unit.
- Some of the non-monetary factors that must be considered before raising a selling price is the impact the price raise has on customers. Will customers be comfortable and financially able to afford these prices? Price rise on the competition should also be noted, if the competitor does not raise their prices as well, the firm can possibly lose business.
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