Assume that you plan to open a soft ice cream franchise in a resort community du

Question

Assume that you plan to open a soft ice cream franchise in a resort community during the summer months. Fixed operating costs for the three-month period are projected to be $9,800. Variable costs per serving include the cost of the ice cream and cone, $0.76, and a franchise fee payable to Austrian Ice, AG, $0.24. A market analysis prepared by Austrian Ice indicates that summer sales in the resort community should total 24,000 units. Determine the price you should charge for each ice cream cone to achieve a $25,000 profit for the three-month period. Round answer to two decimal places. $ Answer price per cone

Explanation / Answer

Fixed cost 9800$

Variable cost 24000*(0.76+0.24)=24000$

So total cost is 33800$

Profit is 25000$

Now sales is 58800$

Sales unit is 24000

So sales price per unit is 58800÷24000= 2.45$

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