Comprehensive problem 5 part a. note: you must complete part a before completing parts b and c. genuine spice inc. began operations on january 1 of the current year. the company produces 8-ounce bottles of hand and body lotion called eternal beauty. the lotion is sold wholesale in 12-bottle cases for $100 per case. there is a selling commission of $20 per case. the january direct materials, direct labor, and factory overhead costs are as follows: direct materials cost behavior units per case cost per unit direct materials cost per case cream base variable 100 ozs. $0.02 $2.00 natural oils variable 30 ozs. 0.30 9.00 bottle (8-oz.) variable 12 bottles 0.50 6.00 $17.00 direct labor department cost behavior time per case labor rate per hour direct labor cost per case mixing variable 20 min. $18.00 $6.00 filling variable 5 14.40 1.20 25 min. $7.20 factory overhead cost behavior total cost utilities mixed $600 facility lease fixed 14,000 equipment depreciat

At a student café, there are equal numbers of two types of customers with the following values. the café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). students with early classes students without early classes coffee 70 60 banana 51 101 the marginal cost of coffee is 10 and the marginal cost of a banana is 40. the café owner is considering three pricing strategies: 1. mixed bundling: price bundle of coffee and a banana for 161, or just a coffee for 70. 2. price separately: offer coffee at 60, price a banana at 101. 3. bundle only: coffee and a banana for 121. do not offer goods separately. assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. for simplicity, assume there is just one student with an early class, and one student without an early class. price strategy revenue from pricing strategy cost from pricing strategy profit from pricing strategy 1. mixed bundling $ $ $ 2. price separately $ $ $ 3. bundle only $ $ $ pricing strategy yields the highest profit for the café owner.