Problem Set 2 Question 1 (22 marks): Clear Water Bay (CWB) Inc. manufactures pies with the...

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Problem Set 2 Question 1 (22 marks): Clear Water Bay (CWB) Inc. manufactures pies with the following estimates for March 2022. Direct labour $2.10/pie Direct materials $1.25/pie Total manufacturing overhead (based on 3,000 pies) $6,750/month Total manufacturing overhead (based on 4,500 pies) $7,725/month Packaging $0.25/pie Advertising $4,500/month Administration $1,600/month Mahonys, a new coffee house, approached CWB and offered to buy all of its pies. If the offer was accepted, CWB could eliminate its advertising costs and reduce its packaging costs by 60%, and it uses the HIGH/LOW method to analyze mixed costs. REQUIRED: Consider each of the following independent cases: (a) (8 marks) If CWB does not accept Mahonys offer, it will sell its pies to the public at $7.95/pie. i) How many pies must CWB sell to the public to break even? (Round up your final answer to the nearest integer. For example, the break even unit should be 19 units if your calculation shows 18.2 units). ii) How many pies must be sold to make a $5,000 profit? (Round up your final answer to the nearest integer. For example, the unit should be 19 units if your calculation shows 18.2 units). b) (8 marks) Assuming that Mahonys offers to pay $6.45/pie, how many pies must CWB sell to Mahonys to break even for the month? (Round up your final answer to the nearest integer. For example, the break even unit should be 19 units if your calculation shows 18.2 units). c) (6 marks) Assuming that Mahonys offers to buy 3,500 pies, i) What is the lowest price per pie that CWB may accept to break even? ii) What price must be charged to make a $2,500 profit? Problem Set 2 Question 1 (22 marks): Clear Water Bay (CWB) Inc. manufactures pies with the following estimates for March 2022. Direct labour $2.10/pie Direct materials $1.25/pie Total manufacturing overhead (based on 3,000 pies) $6,750/month Total manufacturing overhead (based on 4,500 pies) $7,725/month Packaging $0.25/pie Advertising $4,500/month Administration $1,600/month Mahonys, a new coffee house, approached CWB and offered to buy all of its pies. If the offer was accepted, CWB could eliminate its advertising costs and reduce its packaging costs by 60%, and it uses the HIGH/LOW method to analyze mixed costs. REQUIRED: Consider each of the following independent cases: (a) (8 marks) If CWB does not accept Mahonys offer, it will sell its pies to the public at $7.95/pie. i) How many pies must CWB sell to the public to break even? (Round up your final answer to the nearest integer. For example, the break even unit should be 19 units if your calculation shows 18.2 units). ii) How many pies must be sold to make a $5,000 profit? (Round up your final answer to the nearest integer. For example, the unit should be 19 units if your calculation shows 18.2 units). b) (8 marks) Assuming that Mahonys offers to pay $6.45/pie, how many pies must CWB sell to Mahonys to break even for the month? (Round up your final answer to the nearest integer. For example, the break even unit should be 19 units if your calculation shows 18.2 units). c) (6 marks) Assuming that Mahonys offers to buy 3,500 pies, i) What is the lowest price per pie that CWB may accept to break even? ii) What price must be charged to make a $2,500 profit?

Answer rating: 100% (QA)

Lets solve each part of the question step by step a If CWB does not accept Mahonys offer and sells pies to the public at 795pie i To find the breakeve... View the full answer