Selling Coffee on Sundays Assignment

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Added on 2020-03-23

Selling Coffee on Sundays Assignment

Added on 2020-03-23

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Executive SummaryThe given report deals with the analysis of a coffee business Cartagena which has been set byAdam and Virginia. Based on the financial data provided with regards to the running of thebusiness, the objective is to use concepts such as economic and accounting profit so asexpress the profitability of the business and also bring out the underlying difference. Further,the computation of average cost and sunk cost also has been performed. Additionally, theprice elasticity has been computed for the coffee service considering the market dynamics inplay. Besides, the report also focuses on the decision by the owners to keep the productionpegged at 4000 cups despite being a profitable venture. Based on the computations performed, it is apparent that no change in accounting profit hasbeen observed but the economic profit has seen an increase owing to decrease in opportunitycost. Further, the average cost of making coffee before and after the reduction in penalty ratesindicates that there has been a decrease. Besides, it has also been highlighted that the decisionto keep the production level constant by the owners is a prudent one and needs to be viewedin the content of global dynamics.1

Table of ContentsIntroduction................................................................................................................................2Analytical Development.............................................................................................................2Conclusion..................................................................................................................................4Appendix....................................................................................................................................42

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