Question: Your store sells computers and software. The average computer sells for 1,350, but the customer buying a computer also buys an average of 750 in

 Your store sells computers and software. The average computer sells for

Your store sells computers and software. The average computer sells for 1,350, but the customer buying a computer also buys an average of 750 in software You earn only 10% gross profit rate on sales of computers, but you make a 40% gross profit rate on software. You currently are selling 150 computers per month (A) What is the total amount of your monthly gross profit? (5 points) (B) To increase sales, you are thinking about selling computers at cost 1,215. This would be the cheapest price in town," and should attract more customers. You expect each customer who buys a computer to also buy C750 worth of software. Under these assumptions, how many computers must you sell each month In order to earn the same amount of gross profit as you are earning now? (5 points) (C) Assume that as a result of reducing the sales price of computers to cost (1,215, you are able to sell 250 computers each month, and that each customer now buys 850 worth of software. What will be the total amount of your monthly gross profit? (5 points) (D) Assume that you achieve the results specified in part C (250 sales transactions per month, including an average of C850 in software). Would you consider the policy of selling computers at cost successful or unsuccessful? Explain specifically why this strategy is working out favorably or unfavorably. (5 points)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!