Naaz started up a business, and pays £80,000 into her business bank account on 1st July and budgets as follows: Fittings to be purchased on 1st July for £90,000, and this will have to be paid for by the end of the month. Depreciation is £10,000 a year. Wages: £10,000 per month. Rent of warehouse will be £84,000 per annum, payable in monthly instalments at the start of each month. Other costs incurred in the running of the business (excluding purchases) will be £40,000 per month, payable in the month in which the costs are incurred. Purchases will be supplied on one month’s credit (i. e. purchases in July will have to be paid for by the end of August). Half of the sales are expected to be for cash; the remaining half on credit. Naaz is budgeting to allow two months’ credit by her credit customers (i. e. credit sales in July will not be settled until September). For the purposes of the Profit & Loss and Balance Sheet closing stock is valued at £90,000. T

At a student café, there are equal numbers of two types of customers with the following values. the café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). students with early classes students without early classes coffee 70 60 banana 51 101 the marginal cost of coffee is 10 and the marginal cost of a banana is 40. the café owner is considering three pricing strategies: 1. mixed bundling: price bundle of coffee and a banana for 161, or just a coffee for 70. 2. price separately: offer coffee at 60, price a banana at 101. 3. bundle only: coffee and a banana for 121. do not offer goods separately. assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. for simplicity, assume there is just one student with an early class, and one student without an early class. price strategy revenue from pricing strategy cost from pricing strategy profit from pricing strategy 1. mixed bundling $ $ $ 2. price separately $ $ $ 3. bundle only $ $ $ pricing strategy yields the highest profit for the café owner.