 For past 15 years, Santa Lucia has only sold 1 product line: Standard Pasta.

 Now: Company directors deciding if they should produce a second product line to increase  company profits.

 Two options: luxury pastas and gluten-free pastas. 

 Currently, Santa Lucia Wholefoods sells 900,000 units of standard pasta annually at $2.10 per  pack.

  The annual fixed costs for the company are $1,500,000.

 The variable costs per unit are $0.70 for standard pasta.

 The the variable costs for the gluten-free and luxury per unit are $1.65 per unit.

 Sales estimate for luxury brand: 500,000 units p.a., at $4.60/ pack

 Estimate for gluten-free brand: 750,000 units p.a., at $3.75/ pack

Questions to answer:
1. How much profit does Santa Lucia make now with its standard pasta?
2. How much profit will Santa Lucia make if it introduces the luxury pasta and sells standard pasta and  luxury pasta?

Answer rating: 100% (QA)

To calculate the profit for Santa Lucia with its standard pasta we need to consider the fixed costs variable costs and sales revenue 1 Profit with Standard Pasta The fixed costs for the company are 15... View the full answer