Malpeque Bay-view shucks and packs oysters and sells them on

Malpeque Bay-view shucks and packs oysters and sells them on a wholesale basis to fine restaurants across the province. The income statement for last year follows:

Pickers, shuckers, and packers are employed on an hourly basis and can be laid off whenever necessary. Salespeople merely deliver the product and so are paid on a salaried basis. Linda Hanson, manager of Malpeque Bay-view, believes that a price increase of 10% would result in a 15% decrease in sales. The Rake and Tongs Restaurant is providing dinner for a meeting of the Pickers, Shuckers, and Packers Union in Prince Edward Island. Rake and Tongs offered to pay Malpeque Bay-view $65 a case for 300 cases of oysters. This sale would not affect Malpeque Bay-view’s regular sales.

REQUIRED

A. Ignoring the Rake and Tongs offer, estimate the profit-maximizing price for Malpeque Bay-view.

B. Assuming that Linda is not willing to lose money on the Rake and Tongs order, what is the minimum price that she should accept for the special order (Chapter 4)?

C. What other relevant factors might Linda consider before she makes a decision about the Rake and Tongs order? List as many factors as you can.

 

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