Funki Ice Creams Ltd are ice cream makers and distributors. They specialise in making non-dairy ice cream using real fruit. Marketing emphasises their product is organic and made using traditional methods. The oat milk and soya milk ice creams are very popular with people who are lactose intolerant, but the flavour and smoothness also appeals to those who can eat any type of ice cream. This has proved popular and the business has expanded from a team of 12 to its current size.

The current business is focussed on ice cream making and selling to wholesalers, but they have recently branched out in to an ice cream parlour, where they can sell direct to the public.

They operate on a 100 square foot property broken up as follows:

• 60 sq ft = workshop/manufacturing space
• 30 sq ft = office space for management and sales reps
• 10 sq ft = an ice-cream parlour that sells ice cream to the general public.

Funki Ice Cream Ltd employs 50 employees in total, including 30 workshop/production line employees, 10 management and back office staff, five sales reps, two cleaning staff, and three front office staff for the parlour.

Question 1: Cost allocation

Can you come up with a fair way for Funki Ice Cream to allocate their costs between the manufacturing side of the business, and the ice cream parlour?

Question 2: Selling direct

What is the advantage to the business of selling direct to customers?

Post your thoughts about both questions on the discussion group.

Question 3: Staffing levels

The case suggests three staff for the ice cream parlour. Do you think that the same level of staffing is needed at all times eg: Monday morning and Saturday afternoon?

Question 4: Risks and benefits?

What are the possible benefits of Funki building an ice cream parlour? What are the possible risks?