The Following Information Pertains to Three Different Products Being Sold

question 98

Essay

The following information pertains to three different products being sold by Leone Company:
$\begin{array}{rrrrr}\underline{\text { Product }}&\underline{\text { Old Price }}&\underline{\text { New Price }} & \underline{\text { Old Quantity }} &\underline{ \text { New Quantity }}\\\mathrm{X} & \$ 15.00 & \$ 14.25 & 2,000 & 2,200 \\\mathrm{Y} & 20.00 & 18.50 & 3,000 & 3,300 \\\mathrm{Z} & 25.00 & 27.50 & 4.000 & 3.600\end{array}$
a.Determine the price elasticity of demand for each of the products.
b.Which products have an elastic demand? Inelastic demand?

---

Definitions:

Support Departments

Units within an organization that provide essential services and support to the main production or operational departments but do not directly contribute to the primary business product or service.

Machining Department

A specific department within a manufacturing facility where machining processes such as cutting, drilling, or milling are performed on materials.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, enhancing the accuracy of product costing.

Overhead Pools

Aggregations of indirect costs or overheads that are then allocated to products or services based on predetermined criteria.