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Harald Luckerbauer, the manager at Morning Brew Coffee Shop, would like to understand how adding Eiskaffee (a German coffee beverage of chilled coffee, milk, sweetener,
Harald Luckerbauer, the manager at Morning Brew Coffee Shop, would like to understand how adding Eiskaffee (a German coffee beverage of chilled coffee, milk, sweetener, and vanilla ice cream) will alter the shops productivity. His market research shows that Eiskaffee will bring in new customers and not cannibalize current demand. Assuming that the new equipment is purchased before Eiskaffee is added to the menu, Harald has developed new average daily demand and cost projections. The new equipment cost is $200, and the overhead cost is still $350. Modified daily demands, as well as selling price and material costs per beverage for the new product line, are given here in Table 2: a. Using Table 1, calculate the labor productivity and the (combined) multifactor productivity of regular coffee, cappuccino, and Vienna Coffee. (Chapter 1) b. Calculate labor productivity and the combined the multifactor productivity if Eiskaffee is added to the menu. This means that you will use Table 2 to do the calculations. (Chapter 1) c. Calculate the change in multifactor productivity and labor productivity if Eiskaffee is added to the menu. What are your conclusions? (Chapter 1) d. Calculate the breakeven quantity for Eiskaffee. That is, how many units of Eiskaffee would have to be sold to start making a profit for the Eiskaffee line? Let your fixed cost for this question be the same as the equipment cost, and the variable cost be $4.5/unit. e. Based on the breakeven point, will you still advise Morning Brew to invest in the new line of coffee (Eiskaffee)
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