Question
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 Toms salaries. If each owner requires a monthly
salary of $6,000, how many pounds of coffee beans must be sold monthly?
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