As a Budding Entrepreneur,you Have Purchased a Small Bagel Shop

question 40

Essay

As a budding entrepreneur,you have purchased a small bagel shop.You have engaged in a market study to categorize your customers' willingness to pay for a meal (coffee+bagel)into 8 equal sized groups: ($5.00,$4.50,$4.00,$3.50,$3.00,$2.50,$2.00,$1.50).All of your costs are fixed except labor and materials,which cost $2.25 per meal sold.
a.What price should you charge for a meal? Does your answer depend on the total number of consumers?
b.Suppose your market research tells you that the four lowest value groups are all students.Should you offer a student discount? If so,how much?

Calculate discounts and determine the cost of inventory considering the payment terms.

Record transactions related to purchases, sales, and returns under a perpetual inventory system.

Understand the treatment of freight costs in inventory accounting.

Recognize the effect of inventory transactions on the cost of goods sold.

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Definitions:

Individual Bank

A financial institution that deals with consumers and businesses to offer deposit, loan, and investment services on an individual basis.

Discount Rate

The cost in interest that commercial banks and similar storage institutions incur on borrowing from their regional Federal Reserve Bank’s loaning service.

Federal Reserve District Banks

The 12 banks that make up the Federal Reserve System, serving as the central banking system of the United States, each serving a specific geographic district.

Reserve-Requirement Ratio

The fraction of deposits that banks are required by law to keep on hand as reserves or at the central bank.