Julie Long, the manager of the Hamburger Haven, has been told that to earn a reasonable profit she should price her hamburgers at 300% of the cost of ingredients. Ms. Long has gathered the following data on the cost of ingredients used to make a ham-burger.
1. Preformed frozen hamburger patties are purchased from a distributor. Each pound includes seven patties. The distributor charges $1.69 per pound.
2. Hamburger buns are purchased for $1.29 per dozen.
3. Dill pickle slices are purchased by the gallon jar. A gallon costs $8.95 and contains roughly 2,000 pickle slices. Four slices are placed on each burger.
4. Large, ripe tomatoes currently sell for $0.69 each. One tomato yields eight slices and one slice is placed on each burger.
5. A $0.59 head of lettuce provides enough lettuce for 40 burgers.
6. Mayonnaise is purchased in 16-ounce jars for $1.49. One-quarter ounce of mayonnaise is placed on a burger.
7. A $0.79 jar of mustard provides enough mustard for 150 burgers.
8. A $0.99 jar of catsup is sufficient for 50 burgers.
9. A pound of cheese yields 16 slices. Cheese costs $2.59 per pound and each cheeseburger receives one slice.
10. Onions cost $0.15 each and yield enough chopped onions for 45 hamburgers.

A. What is the cost of ingredients for a plain burger (meat and bun only)?
B. What is the cost of materials and suggested selling price for a burger with everything except cheese?
C. People are willing to pay only $0.25 extra for cheese. What price should Ms. Long charge for a hamburger with everything except cheese if she wants the price of a cheeseburger with everything to be 300% of the cost of ingredients?
D. Should Ms. Long consider her competitors’ prices in addition to her costs? Explain.

  • CreatedJanuary 26, 2015
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