Answer:
Option b. a net operating loss occurs.
Explanation:
contribution margin is simply known to be that portion of sales revenue that is yet to be consumed by variable costs and so is an addition to covering the fixed costs. The higher the contribution margin ratio, the more smaller or fewer the units that will need to be manufactured to become profitable. In short, it is sales revenue minus fixed expenses.
Answer:
When any company wants to sale their product without prior knowledge of the market then it's a disaster.
First thing Jack can do is "Test Marketing". If any company has no knowledge of market then fastest way to know your market is test marketing. Jack must put his sweaters in small quantity for sale at different locations. Test marketing needs to be done for whole week. Jack needs to collect the feedback from its customers too. Feedback is the way jack can know the market. Without knowing the market and customers, it's really hard to market or sale your product. Feedback from test marketing activity will actually give him market knowledge and customer's feedback.
Answer:
(a) $700
(b) $5.50
Explanation:
Weekly fixed costs = $6,000
Weekly Total meals = Average customers per day × No. of days
= 500 × 6
= 3,000
Fixed cost per meal = Weekly fixed costs ÷ Weekly Total meals
= $6,000 ÷ 3,000
= $2
(a) Lowest price in total = Number of customers × Variable costs for each meal
= 200 × $3.50
= $700
(b) Lowest price = Variable costs for each meal + Fixed cost per meal
= $3.50 + $2
= $5.50
Answer:
Mrs Smith either shut down the business or invest in efficient equipements that lowers the total cost to below $7
Explanation:
The reason is that the you can not make profit if you product is sold in the market at a higher price than the competitor who offers the same product with the same features. So here, Smith can not make profits by selling the product at $8 because here total cost is $8.25 per unit.
So either she should invest in the business equipments which bring efficiencies and keeps the total costs to below $7 or she should shut down her business because the business is turned into loss making machine.