DT, Inc. operates a kiosk in the French Market , selling insanely delicious bourbon-based hot sauce. Each
Question:
DT, Inc. operates a kiosk in the French Market , selling insanely delicious bourbon-based hot sauce. Each jar sells for $12. The kiosk has shelf space for 1,600 jars and no extra storage. Every morning before opening, a truck delivery is received, and the kiosk is restocked so that it begins each day with an inventory of 1,600 jars. An average of 1,500 jars are sold each day. That is, on the average day, 100 jars remain on the shelves at the end of the day. Fixed daily costs for running the kiosk (rent, attendant salary, etc.) are $6,000. The variable costs for the hot sauce are $6 per jar. A local restaurant chain has offered DT a one-year contract to buy 600 jars a day from the kiosk. These would be picked up from the kiosk at noon each day, and so the kiosk could still sell a maximum of 1,600 jars per day, including the 600 for the restaurant. What is the lowest price (per jar) at which DT should be willing to accept the offer?
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen