Problem Two
The SCU makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although SCU makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price.SCU has a total capital investment of $15,000,000. It expects to produce and sell 300,000 cases of candy in 2021. SCU requires a 10% target return on investment.
(1) Use the high-low method to compute the cost function relating production costs to the number of cases.
Production costs for the most recent 8-year period are as follows:
(2) Expected marketing and distribution costs for 2021 are as follows:
SCU prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital.
Required：
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