Augusta Snowflakes
Student’s Name
Institutional Affiliation
Augusta Snowflakes
Question 1
Audrey wants to provide a bulk purchase discount when attending a trade show in 2014. This compels her to determine the direct and indirect costs for snowflake to make them successful (Adekola & Sergi, 2016). The first year of full production has been 2013 which makes it hard to understand the cost per snowflake. She needs to know if this will have an impact on her business (Parris et al., 2016). Making business decisions depends on gaining and understanding of fixed and variable costs.
Question 2
Augusta 7.5
Total production = 38
Price per unit = $15
Average variable costs per unit = $4.19
Average fixed costs per unit = $25.16
Average cost per unit = $29.35
Adrian 9.3
Total production = 38
Price per unit = $15
Average variable costs per unit = $2.89
Average fixed costs per unit = $25.16
Average cost per unit = $28.05
Foundry 20.7
Total production = 21
Price per unit = $75
Average variable costs per unit = $3.49
Average fixed costs per unit = $25.16
Average cost per unit = $27.05
Question 3
The entire line needs to be sold for $55,000.
Question 4
She needs to continue producing the snowflakes because they cover about 10% of the manufacturing overhead. They contribute to the indirect costs and they cover the direct costs the company (Burns & Dewhurst, 2016).
Question 5
Audrey needs to consider product differentiation by focusing on the current products and increasing marketing incentives (Erasmus, Strydom, & Rudansky-Kloppers, 2016). She can also introduce other lower-priced products to ensure that she can entice the low market segment.
Question 6
She should not offer a wholesale of 50 percent discount because this will harm her profitability.
References
Adekola, A., & Sergi, B. S. (2016). Global business management: A cross-cultural perspective. Routledge.
Burns, P., & Dewhurst, J. (Eds.). (2016). Small business and entrepreneurship. Macmillan International Higher Education.
Erasmus, B., Strydom, J. W., & Rudansky-Kloppers, S. (Eds.). (2016). Introduction to business management. Oxford University Press Southern Africa.
Parris, D. L., Dapko, J. L., Arnold, R. W., & Arnold, D. (2016). Exploring transparency: a new framework for responsible business management. Management Decision, 54(1), 222-247.
