Question
using relevant costs provided above, determine the profitabilty for each of happy chips business Segments. Labeling costs are an additional $.06 per unit and the
using relevant costs provided above, determine the profitabilty for each of happy chips business Segments. Labeling costs are an additional $.06 per unit and the machine has an annual lease cost of $40,000.00
Retail Accounts: | Grocery | Drug | Mass Merchandise |
Unit Sales | 3,000,000 | 450,000 | 500,000 |
Trade Price | $2.30 | $2.10 | $1.50 |
Revenue | $6,900,000 | $945,000 | $750,000 |
COGS/unit | $1.26 | $1.26 | $1.26 |
Unit Sales/segment | 3,000,000 | 450,000 | 500,000 |
Labeling Cost | n/a | n/a | $ * |
COGS/segment | $3,780,000 | $ | $ |
Net Margin | $3,120,000 | $ | $ |
Controllable Fixed Costs | |||
Stocking Cost | $520,000 | $ ** | $ ** |
Delivery Cost | $572,000 | $ ** | $ ** |
Total Controllable Fixed Costs: | $1,092,000 | $ | $ |
Profit/segment | $2,028,000 | $ | $ |
|
Cost Category/Segment | Grocery 250 loc, 2 del/wk | Drug 140 loc, 1 del/wk | Mass Merchandise 6 loc, 3 del/wk |
Stocking Cost ($/Delivery) | $20 | $18 | $30 |
Delivery Cost ($/Delivery) | $22 | $22 | $30 |
**Stocking Cost and Delivery Cost for each segment is the product of:
Cost/delivery deliveries/week 52 weeks number of retail locations served
Grocerys Stocking Cost example: $20 x 2 dels/wk x 52 wks x 250 locations = $520,000
Grocerys Delivery Cost example: $22 x 2 dels/wk x 52 wks x 250 locations = $572,000
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