avid Austin recently purchased a chain of dry cleaners in northern Wisconsin. Although the business is making a press, he could recognize a substantial increase in profits. The new press costs $15,400 to purchase and install and can press 40 shirts an hour (or 320 per day). David estimates that with the new press, it will cost $0.25 to launder and press each shirt. Customers are charged $1.10 per shirt. a. How many shirts will David have to press to break even? b If David cuts his price to $0.99 a shirt, he expects to be able to stabilize his customer base at 250 shirts per day. How long would it take to break even at the reduced price of $0.99? Should David cut his price and buy the new press?

avid Austin recently purchased a chain of dry cleaners in northern Wisconsin. Although the business is making a press, he could recognize a substantial increase in profits. The new press costs $15,400 to purchase and install and can press 40 shirts an hour (or 320 per day). David estimates that with the new press, it will cost $0.25 to launder and press each shirt. Customers are charged $1.10 per shirt. a. How many shirts will David have to press to break even? b If David cuts his price to $0.99 a shirt, he expects to be able to stabilize his customer base at 250 shirts per day. How long would it take to break even at the reduced price of $0.99? Should David cut his price and buy the new press?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 11E

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Question: David Austin recently purchased a chain of dry cleaners in northern Wisconsin. Although the business is making a press, he could recognize a substantial increase in profits. The new press costs $15,400 to purchase and install and can press 40 shirts an hour (or 320 per day). David estimates that with the new press, it will cost $0.25 to launder and press each shirt. Customers are charged $1.10 per shirt. a. How many shirts will David have to press to break even? b. b If David cuts his price to $0.99 a shirt, he expects to be able to stabilize his customer base at 250 shirts per day. How long would it take to break even at the reduced price of $0.99? Should David cut his price and buy the new press?
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Mere Mang Eduard operates a buy and sell business. He sells umbrellas in his shop near the city mall. He gets his umbrellas from a local dealer. Each umbrella costs 90.00 pesos each. Expecting rainy season to come, Mang Eduard purchased 4 dozens of umbrellas every week. The supplier theh charges 200.00 pesos per dozen for freight. Mang Eduard can sell 12 umbrellas every day. Remember to use the factors to consider in projecting revenues and refer to tables 4, 5 and 6 as your guide. Suppose Mang Eduard purchases and sales is the same every month, fill in the necessary information in table 6. Mom Table 4 Cost Projected Cost of Goods Sold (Monthly) Goods Projected Volume Expens Total Cc Merchandise/ Cost per Unit Average No. of Projected Costs of Expens Products Items Sold (Monthly) Purchases (Monthly) (A) F = (D x 30 days) J= (A x F) Month Cost o 06 Goods S Expense Total Total Cost Expenses
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