Each morning, Ned Stenback stocks the drink case at Neds Beach Hut in Myrtle Beach, South Carolina.
Question:
Ned’s Beach Hut sells three types of cold drinks:
1. Yummy Time in 12-oz. cans, for $1.45 per can
2. Yummy Time in 20-oz. bottles, for $1.75 per bottle
3. Pretty Pop in 20-oz. bottles, for $2.30 per bottle
Ned’s Beach Hut pays its suppliers:
1. $0.15 per 12-oz. can of Yummy Time
2. $0.35 per 20-oz. bottle of Yummy Time
3. $0.65 per 20-oz. bottle of Pretty Pop
Ned’s Beach Hut’s monthly fixed expenses include:
Hut rental . . . . . . . . . . . . . . . . . . . . . $ 360
Refrigerator rental . . . . . . . . . . . . . . . 80
Ned’s salary . . . . . . . . . . . . . . . . . . . . 1,500
Total fixed expenses . . . . . . . . . . . . . . $ 1,940
Ned’s Beach Hut can sell all the drinks stocked in the display case each morning.
Requirements
1. What is Ned’s Beach Hut’s constraining factor? What should Ned stock to maximize profits?
2. Suppose Ned’s Beach Hut refuses to devote more than 75 linear feet to any individual product. Under this condition, how many linear feet of each drink should Ned’s stock? How many units of each product will be available for sale each day?
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
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Related Book For
Financial and Managerial Accounting
ISBN: 978-0132497978
3rd Edition
Authors: Horngren, Harrison, Oliver
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