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:

Choco Heaven Sweet Dreams

Units sold to customer 140,000 80,000

Units per order 1,400 1,600

Price per unit $4.75 $5.50

Cost per unit $2.60 $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:

1. Calculate the net profit The Olde Sweet Shoppe receives from each customer. (6 marks)

2. 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)