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you sell 500 bags of popcorn per day at the student union. the cost of the...

you sell 500 bags of popcorn per day at the student union. the cost of the kernels is $.08 per bag; the paper bag costs $.04, you estimate the cost of cooking oil and salt per bag is $.02, and rental for the space to put the machine is $50/day. If you want to make a 80% gross margin on popcorn, what do you need to price it at per bag?

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Answer #1

rental space expense per bag = $50 / 500 = $0.1

Total cost of one one popcorn = cost of the kernels + the paper bag cost + cost of cooking oil and salt per bag + rental space expense per bag = 0.08 + 0.04 + 0.02 + 0.10 = $0.24

If you want 80% gross margin then price of popcorn per bag = $0.24 / 1 - 0.80 = $0.24 / 0.20 = $1.20

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