A Bagel Company Bakes a Specialty Bagel That It Sells

question 72

Multiple Choice

A bagel company bakes a specialty bagel that it sells by the dozen every day.These specialty bagels can only be baked early in the morning before the store opens for business.The company estimates that the daily demand (in dozens) for its specialty bagel is distributed as follows: Specialty bagels are sold by the dozen only at a cost of $9.00 per dozen.The cost to bake each bagel is $0.50.Leftover specialty bagels are sold by the dozen the next day for a 50% discount.The bagel company's cost of underestimating demand,C_u,is

• A)$9.00.
• B)$6.00.
• C)$4.50.
• D)$3.00.

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