Witchs brew company manufactures and sells three potions, Ask an Expert

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Witch's Brew Company manufactures and sells three potions that all use gargoyle eyelashes as an ingredient. The high demand for all three of these potions exceeds the supply of gargoyle eyelashes that Witch's Brew is able to buy from its suppliers. Information related to the three potions is provided below:

Passion Lotion --Luck potion-- Smart potion
Selling price per bottle of potion 100 120 200
variable cost per bottle of potion 70 84 130
Eyelashes required per bottle of potion 2 3 5
Maximum annual demand 1000 1500 1800

Each year, Witch's brew is only able to buy 6,000 gargoyles at a cost of $25 per eyelash. Annual fixed costs at Witch's Brew are $45,000.

Assume the company can find an overseas supplier of gargoyle eyelashes. What is the maximum price per unit Witch's Brew would be willing to pay for this additional supply?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9944406

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