Marshall's grocery store has a small bakery that sells a variety of baked goods. The manager of the bakery responsibility center has decided to sell a cup of coffee and doughnut combo at the low price of $1.75, as a means of attracting customers. The incremental cost of labor per combo sale has been calculated as $0.89, the variable cost of the doughnut is $0.37, and the variable cost of the coffee (including cup) is $0.42. What is the contribution margin for the combo? How does the manager think the combo will affect the bakery's responsibility margin?

  • CreatedApril 17, 2014
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