Question

ur friend Terri Bellow designed a purse that provides an inside pocket to charge smart phones. She plans to sell the product online at around $110. Depending on the materials used, the product’s variable cost ranges from $40 to $50. She asks you to be a business partner and help managing the business.

Please create a data table to show her the scenarios of unit contributions when

      (1) the price changes from $110 to $125, at $1.00 increments, and

      (2) the variable cost changes from $40 to $50, at $0.5 increments.

Please type your numeric answer in the space below each question.

A. The unit contribution in the best scenario is $___

B. The unit contribution in the worst scenario is $___

C. The number of scenarios (combinations of price and cost) that will yield a $76 unit contribution is___

Answer 1

Ans:

A.

Best Scenario :

Price : $125

Unit Cost : $40

Unit Contribution : $125 - $40 = $85

B.

Worst Scenario :

Price : $110

Unit Cost : $50

Unit Contribution : $110 - $50 = $60

C.

Required Unit Contribution : $76

Sales price are determined at the increment of $1.

So Minimum sale price @Minimum cost to Get a contribution of $40 is :

$40 + $76 = $116

Number of Scenario that will Yeild $76 is:

116 to Max Selling price $125 (116,117,118 .......125)

= 10 Scenarios

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