Jordahls grocery store has a small bakery that sells a variety of baked goods. Sales from the
Question:
Jordahl’s grocery store has a small bakery that sells a variety of baked goods. Sales from the bakery average less than 5 percent of the store’s total revenue and is considered a cost center. As a means of attracting customers, the bakery manager has decided to sell a cup of coffee and doughnut combo at low price price of $2.00. Incremental material costs associated with each combo sale average $0.50 per donut and $0.60 per serving of coffee (including a disposable cup). Incremental labor and overhead costs are expected to average $0.80 per combo sale. What is the contribution margin of a combo sale? How might the manager think the combo will affect the bakery’s responsibility margin?
Step by Step Answer:
Financial And Managerial Accounting The Basis For Business Decisions
ISBN: 9781260247930
19th Edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello