Molly Jasper and her sister, Caitlin Peters, got into the novelties business almost by accident. Molly,...

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Molly Jasper and her sister, Caitlin Peters, got into thenovelties business almost by accident. Molly, a talented sculptor,often made little figurines as gifts for friends. Occasionally, sheand Caitlin would set up a booth at craft fairs and sell a few ofthe figurines along with jewelry that Caitlin made. Little bylittle, demand for the figurines, now called Mollycaits, grew, andthe sisters began to reproduce some of the favorites in resin,using molds of the originals. The day came when a buyer for a majordepartment store offered them a contract to produce 2,000 figurinesof various designs for $12,000. Molly and Caitlin realized that itwas time to get down to business. To make bookkeeping simpler,Molly had priced all the figurines at $8.00 each. Variableoperating costs amounted to an average of $6.00 per unit. Toproduce the order, Molly and Caitlin would have to rent industrialfacilities for a month, which would cost them $5,000.
At this time, Mollycaits come in 15 different varieties.Whereas the average variable cost per unit is $6.00, the actualcost varies from unit to unit. What recommendation would you havefor Molly and Caitlin with regard to pricing and the numbers andtypes of units that they offer for sale?

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Answer Recommendations Their business has grown and product varieties are 15 Actual cost varies from unit to units As such it is not prudent to price all figurines at 800 each Although current policies helps keeping bookkeeping simple it may See Answer

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Molly Jasper and her sister, Caitlin Peters, got into thenovelties business almost by accident. Molly, a talented sculptor,often made little figurines as gifts for friends. Occasionally, sheand Caitlin would set up a booth at craft fairs and sell a few ofthe figurines along with jewelry that Caitlin made. Little bylittle, demand for the figurines, now called Mollycaits, grew, andthe sisters began to reproduce some of the favorites in resin,using molds of the originals. The day came when a buyer for a majordepartment store offered them a contract to produce 2,000 figurinesof various designs for $12,000. Molly and Caitlin realized that itwas time to get down to business. To make bookkeeping simpler,Molly had priced all the figurines at $8.00 each. Variableoperating costs amounted to an average of $6.00 per unit. Toproduce the order, Molly and Caitlin would have to rent industrialfacilities for a month, which would cost them $5,000.At this time, Mollycaits come in 15 different varieties.Whereas the average variable cost per unit is $6.00, the actualcost varies from unit to unit. What recommendation would you havefor Molly and Caitlin with regard to pricing and the numbers andtypes of units that they offer for sale?