A beach is 10 miles long and one ice cream vendor is located 3 miles from the eastern edge. On atypical Saturday the beach is very busy: potential customers spread out evenly across the 10miles of beach and 1000 ice cream cones are sold to people sitting on each one mile length of thebeach. The city regulates the price of ice cream to be $1 per cone for all vendors. A secondvendor would like to open and is told by the city that he can locate 1, 3 or 5 miles from thewestern edge of the beach. Finally, customers are willing to pay an extra 20 cents to avoid a onemile walk or the effective price of a cone is $1 plus 20 cents for each mile the customer is locatedaway from the ice cream stand (10 cents for every half mile ect.), and customers buy from thestand that offers the lowest effective price. Calculate the total number of ice cream cones that thevendor can expect to sell at each distance. Assume that the new ice cream cone vendor has afriend on the city council and they let him charge $1.20 per ice cream cone. How many coneswill he sell at the 3 miles from the western edge location? What happens to his total revenue?

Given information- Vendor 1 is located 3 miles from eastern edges No of icecream cone sold 1000…

Answered: mile walk or the effective price of a…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 17E

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