Question
Best Burger (BB) commenced operations as a small family business selling pork rib burger in a cafe in the Central Business District some thirty years
Best Burger (BB) commenced operations as a small family business selling pork rib burger in a cafe in the Central Business District some thirty years ago. Over the years, BB has garnered a strong clientele with its distinctive and flavourfully pork rib as well as the dark sauce that complements the pork ribs perfectly.
With the growing clientele, the business has since shifted to a bigger location in a shop house and air-conditioned. As the company only operates through its one and only shop house, there is always a long queue during peak hours. As a result, takeaway sales have been increasing over the years. Increasingly, eat-in customers have also asked to take away their two most popular products - pork rib burger spice and the dark sauce. Both of these products are currently packaged and sold in small jars, and in respect of the pork rib burger spice, they are prepared fresh.
To leverage upon its strong reputation, BB has in recent years also started retailing through the local supermarket chains. Both the pork rib burger fresh spice and black sauce are sold in a standard sized vacuum-capped jars. The fresh spice's shelf life is three days while the black sauce is six months.
According to the latest sales analysis for 20x8, about 31 percent of BB's fresh spice and 55 percent of its black sauce were sold through supermarkets. The company retails these two products at the same price as those sold at its shop house. The accounting department of BB has provided the following actual sales and costing details for 20x8 (refer to attached).
Fresh Spice Shop House Supermarket Black Sauce Shop House Supermarket Total Average daily sales (jars) Number of days 1,270 580 190 230 310 310 310 310 Retail price per jar ($) 5.00 5.00 3.40 3.40 Direct materials per jar ($) 1.74 1.74 0.785 0.785 Revenue ($) 1,968,500 899,000 200,260 242,420 3,310,180 Less: Direct materials ($) 685,038.00 312,852.00 46,236.50 55,970.50 1,100,097 Direct labour ($) 39,370 1,244,092 17,980 568,168 57,350 154,023.50 186,449.50 2,152,733
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