Your cookie company is growing but not as rapidly as you would like. You are exploring producing products for businesses. During a recent conversation with the owner of a local car dealership, he offered to buy 500 cookies for a special event in the community. He asked that the cookies be displayed in the shape of a car and he would like the dealership’s logo on each cookie. He has agreed that the cookies can be your signature flavor.
The display will cost $200 to build and the logo for each cookie will cost $.03. This is a rush order and may require some overtime. You are required to deliver the cookies to the event and provide a napkin for each cookie.
The business owner would like a deal since he is purchasing so many cookies and you are “getting your name out there”. This could potentially lead to more business.
Prepare calculations to determine what price you will charge the business owner for the entire project. After presenting the bid to the business owner, he offered to pay 85% of what you would like to charge. Can you do it for the reduced price and still make a profit? Prepare a new cost analysis assuming the new price.
Prepare detailed analysis for each part of the assignment, outlining all your costs and revenues. Clearly explain whether you will take the job at the reduced price or pass on it. Explain why.