What does Elizabeth need to consider before entering into a deal with Roger

In fact her business has grown so large that she can no lon Show more Elizabeth Lee is a top seller on eBay. In fact her business has grown so large that she can no longer manage her items on eBays website and ship her products to the auction winners in a timely manner. When she fi rst started she had to ship only a few items each week. To save on the shipping charges she would purchase the shipping materials (boxes tape cushioning and labels) pack the items and take them to the post offi ce herself. Now she has several items to ship every day and she doesnt have time to do it all. Once or twice Elizabeth has used the local Mail Plus store. Sometimes she will ask them to prepare and ship a package; other times she will purchase the materials wrap the package herself and send it from Mail Plus. The stores prices are high but the employees arent incredibly busy and they do a great job. Elizabeth has approached the owner Roger Lippert to see if he is interested in working out an arrangement in which she would receive a 20% discount on custom packaging. She knows she cant get a discount on the actual shipping chargeMail Plus uses the U.S. Postal Service. Roger has expressed interest in the idea but is having diffi culty determining whether he will make any money on the deal without knowing the specifi c items Elizabeth would want to ship. Following is an income statement for the custom packaging portion of his business: Revenues (1200 custom packages) $18000 Cartons (6000) Cushioning (600) Tape labels (1500) Salaried Labor (4000) Overhead (4100) Income $ 1800 Rogers pricing system is simple: He multiplies the cost of the carton required for the job by three. The larger the carton he reasons the longer it takes to pack and the more materials it requires. He feels he has done quite well with this pricing system. If he gives Elizabeth a 20% discount he thinks he will lose money. Required a. Based on the information given would Roger make money on Elizabeths offer? b. What does Roger need to consider besides the income he would receive from Elizabeth? c. What does Elizabeth need to consider before entering into a deal with Roger? Show less

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