Question

Cute Cookies (CC) sells cookies, brownies, and beverages to small local shops. The selling price per brownie is $1.25, the variable cost is $0.75, and the average cost is $1.00. The principal of an elementary school asked CC to provide 10 dozen brownies for its spring picnic. The principal wants to buy the brownies at CC’s cost. Unlike regular sales, each special order brownie must be delivered in a plastic container to protect it from dust. The containers cost $0.05 each. The brownies can be prepared ahead of time when workers are not busy.

REQUIRED
A. Under the quantitative decision rule for special orders, what is the minimum price per brownie that CC’s management should accept?
B. If the principal can pay no more than $0.80 per brownie, should CC take the order? Why or why not?
C. List several qualitative and risk factors that could affect cost and price information and result in a poor decision.



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  • CreatedJanuary 26, 2015
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