Please complete this case study using the following assumptions for Part $1$ and Part $2$:

INTRODUCTION

Snowie$,$ owned by Carl and Gordon Rupp, is a company that provides training, equipment, and supplies for operating a shaved ice business. Shaved ice is an ice$-$based refreshment made by shaving a block of ice into a fluffy, snow$-$like ice. The product is served in cups with flavored syrups added to the ice. Due to its fine texture, shaved ice absorbs the syrup, making each bite flavorful. Snowie does not sell franchises. It sells a wide array of equipment and supplies, including ice shavers, kiosks, carts, buses, syrups, cups, and other supplies to independent operators.

Costs

All listed costs relate to the large size Snowie

Ice per Snowie $$0\mathrm{.}20$

Spoon straw $($need one per Snowie$)$ $$0\mathrm{.}02$

Styrofoam cup $($need one per Snowie$)$ $$0\mathrm{.}08$

Napkin per sheet $($need two per Snowie$)$ $$0\mathrm{.}01$

Servings per gallon of syrup $28$

Cost per gallon of syrup $($includes concentrate, preservative, and sugar$)$ $$4\mathrm{.}25$

Hourly rate for workers $$10\mathrm{.}00*$

Event registration fee per day $$25\mathrm{.}00*$

Electricity, insurance, maintenance, and permit costs per month $$250\mathrm{.}00*$

Kiosk rental per month $$650\mathrm{.}00*$

Purchase cost of two ice shavers $($five$-$year life$)$ $$3,180\mathrm{.}00$

Purchase cost of a flavor station $($five$-$year life$)$ $$1,080\mathrm{.}00$

$*$Assumption made for this case

All monetary figures are expressed in U$.$S$.$ dollars

Assumptions

Number of days you anticipate opening the Snowies Kiosk per month $-10$ days

Number of hours you will work per day $-10$ hours per day

Number of hours you will pay employees per day $-6$ hours per day

PART $1$: COST$-$VOLUME$-$PROFIT ANALYSIS FOR A SNOWIE KIOSK

Assume that you are evaluating whether to start a Snowie$1$ business. You could operate a shaved ice kiosk at fairs, downtown areas, and other outdoor events. The kiosk is portable with wheels and a hitch. It has plenty of storage place, work area, electrical outlets, lighting, and a water system. The flavored shaved ice, a $$Snowie$,$ is normally offered in three sizes. For this case, we are going to assume that only one size is offered$$the large size, $20$ oz$.$ The large Snowie sells for US$$4\mathrm{.}00.$ See Table for a list of all costs related to a large size Snowie. In this case, use straight$-$line depreciation with a five$-$year life and salvage values of zero for both the ice shavers and the flavor station. All monetary amounts in this case are expressed in U$.$S$.$ dollars.

PART $2$: SPECIAL$-$ORDER PRICING FOR A SNOWIE EVENT Assume that Main Street Kent, an organization that hosts outdoor events in downtown Kent, approaches you about bringing your Snowie kiosk to the Octoberfest in Kent for one day in October. Main Street Kent will provide the cups for the event that are branded with the Kent Octoberfest logo$,$ so you will not have any cup costs for this event. Main Street Kent will also not be charging you a registration fee for this event. Main Street Kent will allow you to advertise your business in its mailings for two months at no cost and asks you to cut your Snowie price for this one event to US$$3\mathrm{.}00$ in exchange for the free advertising. You have no other event scheduled for this one day in October, and you would work the event by yourself $($you will not pay an employee for this one$-$day event$).$ You anticipate that you will sell $200$ Snowies on this one day at Octoberfest. Do you accept Main Street Kent$$s special price offer? Why or why not? Support your answer