Scenario One: "What if" Analysis for adding flavored Ice coffees. Your client is unsure if she should sell flavored ice coffee. She thinks she can sell a coffee to every second customer and it seems to be lucrative because the coffee sells for $3.75 each and costs him only $1.70 to purchase. Unfortunately your client is afraid that he would cannibalize his soft drink sales with the coffee customers (one soft drink less for every coffee sold). It will cost him $5,250 to purchase the I equipment and insurance costs would rise by another $175 per month due to the hot equipment needed to make the coffee. What is your recommendation: Should your client offer flavored coffee to her customers?
Scenario One: "What if" Analysis for adding flavored Ice coffees. Your client is unsure if she should sell flavored ice coffee. She thinks she can sell a coffee to every second customer and it seems to be lucrative because the coffee sells for $3.75 each and costs him only $1.70 to purchase. Unfortunately your client is afraid that he would cannibalize his soft drink sales with the coffee customers (one soft drink less for every coffee sold). It will cost him $5,250 to purchase the I equipment and insurance costs would rise by another $175 per month due to the hot equipment needed to make the coffee. What is your recommendation: Should your client offer flavored coffee to her customers?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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