Question
The Wawa Chain knows that its gasoline is a necessary product for its customers, but that it would prefer to sell Hoagies. To keep its
The Wawa Chain knows that its gasoline is a necessary product for its customers, but that it would prefer to sell Hoagies. To keep its analysis manageable it treats all Hoagies as one product. Here is the data it provides you:
Gasoline (1 Gallon) |
Hoagie (1 Sandwich) | ||
Sales Price | $4.00 | $6.00 | |
Variable Costs Per Unit | $3.75 | $3.50 | |
Contribution Margin Per Unit | $.25 | $2.50 | |
Necessary (Min) Demand Per Day | 5,000 | 750 | |
Possible (Max) Demand For Day | 10,000 | 2,500 | |
Fixed Costs (Per Day) | Ins., Rent, Franchise Fee (etc.) | $5,000*************************** | ******************************* |
Using the data, calculate the ideal daily sales mix and calculate the chain's profit for the day at that point. (Show all work. It is not possible to earn a full score if you only show the ideal # of gallons of gasoline, # Hoagie Sandwiches, and Gross Profit total only.) Your answer will be provided to Wawa Execs so be sure they can understand it.
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