Question

You are planning a promotion that will feature a lunch special. The lunch special will feature a loss leader of a small order of French fries for $0.50 when the customer purchases a hamburger and soda at the same time. The normal retail price of the small French fries is $ 0.99. Your cost for the fries is $0.50. How much margin is being lost if you sell 35 of the lunch specials? a) $19.25 b) $17.85 c) $17.15 d) $20.00

Answer 1

c) $17.15

Step-by-step explanation:

Normal retail price of fries: $0.99

Cost of the fries: $0.50

Margin= $0.99-$0.50=$0.49

Considering, that with the lunch special, the fries are sold at a price of $0.50 which is the same as the cost of them, the margin lost per fries order is $0.49. If you sell 35 of the lunch specials, the total margin lost is:

$0.49*35= $17.15