Question

The Vaughn House sells ice cream cones in a variety of flavours. Data for a recent week appear here: Revenue (900 cones at $1.51 each) $1,359 Cost of ingredients 513 Rent 288 Store attendant 495 Income $ 63 The Vaughn House's manager received a call from a university student club, requesting a bid on 100 cones to be picked up in three days. The cones could be produced in advance by the store attendant during slack periods and then stored in the freezer. Each cone requires a special plastic cover that costs $0.07. What quantitative information is relevant for this decision? Cost of ingredients Rent Store attendant Special plastic cover LINK TO TEXT Using the general decision rule, what is the minimum acceptable price per cone for this special order? (Round entry to 2 decimal places, e.g. 15.25.) Price $

Answer 1

Solution

	Answer
Cost of ingredient	Relevant
Rent	Irrelevant
Store attendent	Irrelevant
Special plastic cover	Relevant

.

Minimum price = $513.07

Working

Cost of ingredient	$        513.00
Rent	$                 -
Store attendent
Special plastic cover	$            0.07
Total relevant cost per cone	$        513.07

Only relevant cost will be considered when calculating minimum price.