Question
1. You are the beverages manager of an exclusive high-end nightclub night club that attracts people from all over the world (think of Club Tao
1. You are the beverages manager of an exclusive high-end nightclub night club that attracts people from all over the world (think of Club Tao in Las Vegas). You are trying to assess the revenue possibilities of offering Hennessy XO (very decent cognac) for sale. XO typically sells on average for about $200.00 a bottle at the retail level. However, the club can buy it by the case at the wholesale level and pay a discount price for, lets say, around $188.00 a bottle. XO comes in 750 milliliters (ml.) bottles only (fifth bottle). Each 750ml bottle will yield roughly 17 shots. You need to make a decision quickly so that your boss can begin to allocate resources to acquire this product. Here are the questions that you must answer. How much revenue can the club generate a case (24 bottles) if it sells each shot of XO at $20.00? How much profit is generated per bottle? How much profit is generated per drink? What price should each shot of XO be sold at to at least break-even? Given these profit margins, is the price charged a good price? Should you adopt XO to generate income or not go forward with the proposed project? Why or why not?
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