Diane's Delicious Donuts (DDD) has a production line that can produce 35,000 donuts per month. In...

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Diane's Delicious Donuts (DDD) has a production line that can produce 35,000 donuts per month. In scenario 1: Diane sells 25,000 donuts per month to retailers at $1.50 each, and 10,000 donuts per month directly to consumers at $1.75 each. DDD's total fixed cost is $5,000 per month and DDD has a variable cost of production, which is $0.75 per donut. In scenario 2: Diane has a promotional plan. She has a variable promotional cost of $0.25 per donut. Diane's promotional plan increases retailer sales to 30,000 donuts and consumer sales to 20,000 donuts. Based on the information: a) Calculate DDD's profit margin in these two scenarios (30 points) b) Which scenario would you recommend? (2 points) Retailer Revenue Quantity Sold 25,000 Price $1.5 Consumer Revenue Quantity Sold Price Scenario 1 Total Fixed Cost Variable Cost per Donut Production Promotion 10,000 $1.75 $5,000 $0.75 Scenario 2 30,000 $1.5 20,000 $1.75 $5,000 $0.75 $0.25 Diane's Delicious Donuts (DDD) has a production line that can produce 35,000 donuts per month. In scenario 1: Diane sells 25,000 donuts per month to retailers at $1.50 each, and 10,000 donuts per month directly to consumers at $1.75 each. DDD's total fixed cost is $5,000 per month and DDD has a variable cost of production, which is $0.75 per donut. In scenario 2: Diane has a promotional plan. She has a variable promotional cost of $0.25 per donut. Diane's promotional plan increases retailer sales to 30,000 donuts and consumer sales to 20,000 donuts. Based on the information: a) Calculate DDD's profit margin in these two scenarios (30 points) b) Which scenario would you recommend? (2 points) Retailer Revenue Quantity Sold 25,000 Price $1.5 Consumer Revenue Quantity Sold Price Scenario 1 Total Fixed Cost Variable Cost per Donut Production Promotion 10,000 $1.75 $5,000 $0.75 Scenario 2 30,000 $1.5 20,000 $1.75 $5,000 $0.75 $0.25

Answer rating: 100% (QA)

a To calculate DDDs profit margin in both scenarios we first need to determine the total revenue and ... View the full answer