=+16-21 K Non-financial quality measures, on-time delivery OBJECTIVES 2, 4 Snappy Pizza promises to deliver pizzas in
Question:
=+16-21 K Non-financial quality measures, on-time delivery OBJECTIVES 2, 4 Snappy Pizza promises to deliver pizzas in 25 minutes or less. If pizzas are not delivered on time, then the customer receives $5 off the price of the order. Store managers receive bonuses based on store profits. Some of these managers believe that the guarantee is a win–win situation for Snappy Pizza. Because the average pizza sells for $9 but has a marginal cost of $2.25, the store makes a profit no matter what the delivery time. If a pizza is delivered on time, then the store earns $6.75 ($9 – $2.25) per pizza. If a pizza is delivered late, then the store still earns $1.75 ($9 – $5 – $2.25) per pizza. If more than one pizza is ordered, then Snappy Pizza makes even more money because it only gives one $5 discount per order.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9781442563377
2nd Edition
Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan