On a chilly Saturday morning, Roy Parker bought 30 dozen doughnuts for ($ 72), took 10 litres

Question:

On a chilly Saturday morning, Roy Parker bought 30 dozen doughnuts for \(\$ 72\), took 10 litres of hot coffee and went to a farm auction. He sold all the coffee and all but six dozen of the doughnuts before heading for home late in the afternoon. Knowing that he could not eat six dozen doughnuts himself, and that they would be worthless by the next day, he began to consider how he might sell the remaining doughnuts. Only one possibility occurred to him. If he drove across town and left the doughnuts in the lunchroom at the plant where he worked, he was sure that workers on the late shift would be happy to buy the doughnuts. He felt the 8-kilometre round trip to the plant would cost him about \(\$ 0.25\) per kilometre. It would take him about an hour to make the trip, and he decided that it would be worthwhile to drive to the plant if he were compensated \(\$ 10\) for his time. Roy believes that workers will 'forget' to pay for one dozen of the doughnuts.

Required:

Prepare an analysis to determine how much Roy would have to charge per doughnut on the doughnuts he sells at the plant to recover his profit goal of \(\$ 10\) for his time.

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Accounting Information For Business Decisions

ISBN: 9780170253703

2nd Edition

Authors: Billie Cunningham, Loren A. Nikolai, John Bazley, Marie Kavanagh, Geoff Slaughter, Sharelle Simmons

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