Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Scott and Tom are coffee roasters. They can roast up to 12,000 pounds of coffee beans monthly at their flagship store in Soho. However, they

Scott and Tom are coffee roasters. They can roast up to 12,000 pounds of coffee beans monthly at their

flagship store in Soho. However, they can only sell 3,000 pounds of coffee beans in the Soho store

(flagship). Thus, Scott and Tom decided to open two additional retail stores where the remaining beans

will be sold. In each of the two new stores they can only sell 4,500 pounds of coffee beans monthly. The

fix costs of the flagship store are $45,000 and the fix costs of each of the retail stores are $15,000. The

variable costs of producing a pound of coffee beans are $7 per pound. The variable selling costs are $3

per pound at the flagship store and $2 per pound at the two retail stores.

There is enough demand in all of the stores to satisfy the selling capabilities of each store. Yet, Scott and

Tom would like to first satisfy the sale in the flagship store before transferring products to the two retail

stores. The average selling price for a pound of coffee beans is $18.

The expenses listed so far do not include Scott and Tom's salaries. If each owner requires a monthly

salary of $6,000, how many pounds of coffee beans must be sold monthly?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting in an Economic Context

Authors: Jamie Pratt

8th Edition

9781118139424, 9781118139431, 470635290, 1118139429, 1118139437, 978-0470635292

More Books

Students also viewed these Accounting questions

Question

What is the difference between Centrex and PBX?

Answered: 1 week ago