You operate a lemonade stand. The wholesale cost of lemonade is $0.50 per unit. The cost of rent for the stand is $30 per day. You need to choose your pricing and advertising strategy. You are considering three alternatives: A: If you set the selling price to $1.50 per unit and spend $0 on advertising, you will sell 120 units per day.
B: If you reduce the selling price to $1.20 per unit and spend $0 on advertising, you will sell 180 units per day.
C: If you set the selling price to $1.50 per unit and spend $30 per day on advertising, you will sell 180 units per day.
a) Compute revenue, costs, and profit per day for each alternative.
Costs:
Lemonade (wholesale)
rent
chvrisi
Profit
b) Which alternative should you choose?
a. A
b. B
c. C
c) Is rent a relevant cost?
A. NO (the cost is the same for all three alternatives; it can be ignored)
B. YES (the cost differs across alternatives; it should not be ignored)
d) Is advertising a relevant cost?
A. YES (the cost differs across alternatives; it should not be ignored)
B. NO (the cost is the same for all three alternatives; it can be ignored)

Answer and Explanation:

a. The computation of revenue, costs, and profit per day for each alternative is shown below:-

Particulars            A            B               C

Revenue             180         216            270

                  (120 × $1.50) (180 × $1.20) (180 × $1.50)

Costs  

Lemonade                 60            90            90

                 (120 × $0.50) (180 × $0.50) (180 × $0.50)

Rent                          $30            $30         $30

Advertising                  0               0               0

Profit                           90             96              150

For computing the profit we simply deduct the cost from the revenue

b. Since, C gave maximum profit. So, C is the right answer.

c. Since, Rent is not an accurate cost as rent is the same for all. so, it can be ignored. Hence, the correct answer is A.

d. Advertising is an equal cost as advertising differs across different alternatives, it should not be ignored.

Hence, the correct answer is A.

answer with step-by-step explanation:

a. wx is perpendicular to xy - true:

(since x is adjacent to x and y and all angles are 90 degrees in a square, therefore wx is perpendicular to xy)

b. ∠w is congruent to ∠x - true:

(all angles in a square are equal to each other)

c. ∠w is supplementary to ∠x - true:

(∠w and ∠x both are right angles which add up to 180 degrees so they are supplementary angles)

d. wxyz is a rhombus - true:

(a rhombus has all sides equal in length and so has a square so it is a rhombus)

e. wxyz is a trapezoid - false:

(a trapezoid has only one pair of parallel sides while a square has two pairs of parallel sides)

f. wx is parallel to yz - true:

(wx and yz are parallel to each other)