Question

Oysters Away shucks and packs oysters and sells them wholesale to fine restaurants across the state. The income statement for last year follows:


Pickers, shuckers, and packers are employed on an hourly basis and can be laid off whenever necessary. Salespeople merely deliver the product, and so are paid on a salaried basis.
Linda Hanson, manager of Oysters Away, believes that a price increase of 10% would result in a 15% decrease in sales. The King Krab Restaurant is providing dinner for a meeting of the Pickers, Shuckers, and Packers Union in Seattle. King Krab offered to pay Oysters Away $65 a case for 300 cases of oysters. This sale would not affect Oysters Away’s regular sales.

REQUIRED
A. Ignoring the King Krab offer, estimate the profit-maximizing price for Oysters Away.
B. Assuming Linda is not willing to lose money on the King Krab order, what is the minimum price that she should accept for the special order?
C. What other relevant factors might Linda consider before she makes a decision about the King Krab order? List as many factors as youcan.


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  • CreatedJanuary 26, 2015
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