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Question 4 (8 marks) The Olde Sweet Shoppe produces homemade fudge. The company has two main customers, Choco Heaven and Sweet Dreams. Information related to
Question 4 (8 marks) The Olde Sweet Shoppe produces homemade fudge. The company has two main customers, Choco Heaven and Sweet Dreams. Information related to each customer is shown below: Units sold to customer Units per order Price per unit Cost per unit Choco Heaven 140,000 1,400 $4.75 $2.60 Sweet Dreams 80,000 1,600 $5.50 $2.80 In addition to the costs listed above, there are Customer Specific Costs as follows: Order taking $150 per order Delivery $60 per order Product handling $0.10 per unit sold Required: a) Calculate the net profit The Olde Sweet Shoppe receives from each customer. (6 marks) b) The Olde Sweet Shoppe is currently using full capacity to service Choco Heaven and Sweet Dreams. The Olde Sweet Shoppe has the option to use its full capacity to serve Choco Heaven, or it could continue serving both customers as is. Explain which option (showing relevant calculations) The Olde Sweet Shoppe should choose. (2 marks)
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