Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Chapter 8, Problem 8.26AE
Determine product mix for retailer—two stocking scenarios (Learning Objective 5)
Each morning, Larry Imery stocks the drink case at Larry’s Beach Hut in Charlotte, North Carolina. Larry’s Beach Hut has 110 linear feet of refrigerated display space for cold drinks. Each linear foot can hold either five 12-ounce cans or three 20-ounce plastic or glass bottles. The beverage stands sells three types of cold drinks:
- 1. Cola in 12-oz. cans for $1.40 per can
- 2. Bottled water in 20-oz. plastic bottles for $1.75 per bottle
- 3. Orange juice in 20-oz. glass bottles for $2.10 per bottle
Larry’s Beach Hut pays its suppliers the following:
- 1. $0.20 per 12-oz. can of cola
- 2. $0.45 per 20-oz. bottle of water
- 3. $0.75 per 20-oz. bottle of orange juice
Larry’s Beach Hut’s monthly fixed expenses include the following:
| Hut rental | $345 |
| Refrigerator rental | 65 |
| Larry’s salary | 1.750 |
| Total fixed expenses | $2,160 |
The beverage stand can sell all drinks stocked in the display case each morning.
Requirements
- 1. What is the constraining factor at Larry’s Beach Hut? What should Larry stock to maximize profits? What is the maximum contribution margin he could generate from refrigerated drinks each day?
- 2. To provide variety to customers, suppose Larry refuses to devote more than 60 linear feet and no less than 20 linear feet to any individual product. Under this condition, how many linear feet of each drink should be stocked? How many units of each product will be available for sale each day?
- 3. Assuming the product mix calculated in Requirement 2, what contribution margin will be generated from refrigerated drinks each day?
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Each morning, Mike Root stocks the drink case at Mike's Beach Hut in Myrtle Beach, South Carolina. The drink case has 90 linear feet of refrigerated drink space. Each linear foot can hold either seven 12-ounce cans or three 20-ounce bottles.
View the information on the cold drinks.
MikeBeach Hut can sell all the drinks stocked in the display case each morning.
Read the requirements.
- X
Requirement 1. What is Mike's Beach Hut's constraining factor? What should Mike's Beach Hut stock to maximize profits?
The constraining factor is linear feet of shelf space
What should Mike's Beach Hut stock to maximize profits?
Complete the product mix analysis to determine which product would maximize Mike's Beach Hut's profits.
Yummy Time
12 oz. Cans
Yummy Time
20 oz. Bottles
Pretty Pop
20 oz. Bottles
Sales price per unit
Variable cost per unit
Contribution margin per unit
Units per linear foot of shelf space
Contribution margin per linear foot of shelf space
Cold Drinks Information
Mike's Beach Hut…
Each morning, Larry Imery stocks the drink case at Larry’s Beach Hut in Charlotte, North Carolina. Larry’s Beach Hut has 110 linear feet of refrigerated display space for cold drinks. Each linear foot can hold either five 12-ounce cans or three 20-ounce plastic or glass bottles. The beverage stands sells three types of cold drinks:
1. Cola in 12-oz. cans for $1.40 per can
2. Bottled water in 20-oz. plastic bottles for $1.75 per bottle
3. Orange juice in 20-oz. glass bottles for $2.10 per bottle
Larry’s Beach Hut pays its suppliers the following:
1. $0.20 per 12-oz. can of cola
2. $0.45 per 20-oz. bottle of water
3. $0.75 per 20-oz. bottle of orange juice
Larry’s Beach Hut’s monthly fixed expenses include the following in the chart below:
The beverage stand can sell all drinks stocked in the display case each morning.
Requirements
1. What is the constraining factor at Larry’s Beach Hut? What should Larry stock to maximize profits? What is the maximum contribution margin he could…
LEARNER'S MODULE
Section:
Name of the Student
2. Pinoy Desserts Café Monthly Sales Report (December 2015)
Selling Price
Php 15
Php 50
Php 25
Php 25
Php 25
Grand Total
Item
Number of Items Sold
Total Profit
Php 128, 115
Php 60, 600
Php 33, 350
Php 19, 600
Php 24, 200
Php 265, 865
Turon
8, 541
Halo-halo
1, 212
Mais con Yelo
1, 334
Saba con Yelo
784
Sorbetes
968
12, 839
Interpretation of the data:
Chapter 8 Solutions
Managerial Accounting (5th Edition)
Ch. 8 - Prob. 1QCCh. 8 - (Learning Objective 1) Keys to making short-term...Ch. 8 - (Learning Objective 2) Which is true of...Ch. 8 - (Learning Objective 3) Which of the following...Ch. 8 - Prob. 5QCCh. 8 - Prob. 6QCCh. 8 - (Learning Objective 4) A segment margin is the a....Ch. 8 - (Learning Objective 5) When resources are...Ch. 8 - (Learning Objective 6) Which of the following is...Ch. 8 - Prob. 10QC
Ch. 8 - Determine relevance of information (Learning...Ch. 8 - Prob. 8.2SECh. 8 - Prob. 8.3SECh. 8 - Prob. 8.4SECh. 8 - Prob. 8.5SECh. 8 - Prob. 8.6SECh. 8 - Prob. 8.7SECh. 8 - Prob. 8.8SECh. 8 - Product mix decision: Unlimited demand (Learning...Ch. 8 - Prob. 8.10SECh. 8 - Outsourcing production decision (Learning...Ch. 8 - Relevant information for outsourcing delivery...Ch. 8 - Prob. 8.13SECh. 8 - Prob. 8.14SECh. 8 - Prob. 8.15SECh. 8 - Determine relevant and irrelevant information...Ch. 8 - SUSTAINABILITY ES-17A Sustainability and...Ch. 8 - Prob. 8.18AECh. 8 - Prob. 8.19AECh. 8 - Analyze special order decision (Learning Objective...Ch. 8 - Prob. 8.21AECh. 8 - Prob. 8.22AECh. 8 - Prob. 8.23AECh. 8 - Discontinuing a product line (Learning Objective...Ch. 8 - Prob. 8.25AECh. 8 - Determine product mix for retailertwo stocking...Ch. 8 - Prob. 8.27AECh. 8 - Make-or-buy product component (Learning Objective...Ch. 8 - Prob. 8.29AECh. 8 - Prob. 8.30AECh. 8 - Prob. 8.31AECh. 8 - Prob. 8.32BECh. 8 - Prob. 8.33BECh. 8 - Prob. 8.34BECh. 8 - Prob. 8.35BECh. 8 - Prob. 8.36BECh. 8 - Prob. 8.37BECh. 8 - Prob. 8.38BECh. 8 - Prob. 8.39BECh. 8 - Prob. 8.40BECh. 8 - Identify constraint, then determine product mix...Ch. 8 - Determine product mix for retailertwo stocking...Ch. 8 - Prob. 8.43BECh. 8 - Prob. 8.44BECh. 8 - Prob. 8.45BECh. 8 - Determine maximum outsourcing price (Learning...Ch. 8 - Prob. 8.47BECh. 8 - Prob. 8.48APCh. 8 - Special order decision and considerations...Ch. 8 - Prepare and use contribution margin statements for...Ch. 8 - Product mix decision under constraint (Learning...Ch. 8 - Outsourcing decision given alternative use of...Ch. 8 - Prob. 8.53APCh. 8 - Prob. 8.54BPCh. 8 - Prob. 8.55BPCh. 8 - Prepare and use contribution margin statements for...Ch. 8 - Prob. 8.57BPCh. 8 - Prob. 8.58BPCh. 8 - Prob. 8.59BPCh. 8 - Decide whether to discontinue a department...Ch. 8 - Prob. 8.61ACTCh. 8 - Outsourcing Decision at a Real Company Go to the...Ch. 8 - Prob. 8.63ACTCh. 8 - Prob. 8.64ACT
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