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Cathy Gwynn for a class project is analyzing a "Quick Shop" grocery store. The store emphasizes quick service, a limited assortment of grocery items, and higher prices. Cathy wants to see if the store hours (currently 0600 to 0100) can be changed to make the store more profitable. Daily Sales in Time Period the Time Period 0600–0700 $ 40 0700–0800 80 0800–0900 120 0900–1200 400 1200–1500 500 1500–1800 600 1800–2100 800 2100–2200 200 2200–2300 60 2300–2400 120 2400–0100 40 The cost of the groceries sold averages 70% of sales. The incremental cost to keep the store open, including the clerk's wage and other operat- ing costs, is $22 per hour. To maximize profit, when should the store be opened, and when should it be closed?

Cathy Gwynn for a class project is analyzing a "Quick Shop" grocery store. The store emphasizes quick service, a limited assortment of grocery items, and higher prices. Cathy wants to see if the store hours (currently 0600 to 0100) can be changed to make the store more profitable. Daily Sales in Time Period the Time Period 0600–0700 $ 40 0700–0800 80 0800–0900 120 0900–1200 400 1200–1500 500 1500–1800 600 1800–2100 800 2100–2200 200 2200–2300 60 2300–2400 120 2400–0100 40 The cost of the groceries sold averages 70% of sales. The incremental cost to keep the store open, including the clerk's wage and other operat- ing costs, is $22 per hour. To maximize profit, when should the store be opened, and when should it be closed?

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 45E: Scattergraph Method Refer to the information for Luisa Crimini above. Required: CONCEPTUAL...
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### Analyzing Store Hours for Profit Maximization: A Case Study #### Introduction Cathy Gwynn, for a class project, is analyzing a "Quick Shop" grocery store. The store emphasizes quick service, a limited assortment of grocery items, and higher prices. Cathy wants to determine if adjusting the store hours (currently 0600 to 0100) can make the store more profitable. #### Time Period Analysis Below is a table summarizing the daily sales within specific time periods: | **Time Period** | **Daily Sales in the Time Period** | |:---------------:|:---------------------------------:| | 0600–0700 | \$40 | | 0700–0800 | \$80 | | 0800–0900 | \$120 | | 0900–1200 | \$400 | | 1200–1500 | \$500 | | 1500–1800 | \$600 | | 1800–2100 | \$800 | | 2100–2200 | \$200 | | 2200–2300 | \$60 | | 2300–2400 | \$120 | | 2400–0100 | \$40 | #### Additional Costs and Analysis The cost of groceries sold averages 70% of sales. The incremental cost to keep the store open, including the clerk’s wage and other operating costs, is \$22 per hour. #### Objective To maximize profit, Cathy needs to analyze and determine the optimal opening and closing times for the store. ### Graphical Representation Although there is no specific graph provided, the table data can be visualized through a bar chart. The x-axis represents different time periods while the y-axis represents the daily sales in those periods. This graphical representation helps in identifying peak sales hours effectively. ### Strategy for Profit Maximization 1. Calculate the profit for each time period by subtracting the operating costs from the sales revenue, considering the 70% cost of sales. 2. Determine which specific time periods show a positive net profit after accounting for the \$22 per hour operating costs. 3. Adjust store hours to close during periods with consistently low or negative profitability and remain open during periods with higher profitability. #### Example Calculation - For the time period 0600–0700: - Sales: \$40 - Cost of
Transcribed Image Text:### Analyzing Store Hours for Profit Maximization: A Case Study #### Introduction Cathy Gwynn, for a class project, is analyzing a "Quick Shop" grocery store. The store emphasizes quick service, a limited assortment of grocery items, and higher prices. Cathy wants to determine if adjusting the store hours (currently 0600 to 0100) can make the store more profitable. #### Time Period Analysis Below is a table summarizing the daily sales within specific time periods: | **Time Period** | **Daily Sales in the Time Period** | |:---------------:|:---------------------------------:| | 0600–0700 | \$40 | | 0700–0800 | \$80 | | 0800–0900 | \$120 | | 0900–1200 | \$400 | | 1200–1500 | \$500 | | 1500–1800 | \$600 | | 1800–2100 | \$800 | | 2100–2200 | \$200 | | 2200–2300 | \$60 | | 2300–2400 | \$120 | | 2400–0100 | \$40 | #### Additional Costs and Analysis The cost of groceries sold averages 70% of sales. The incremental cost to keep the store open, including the clerk’s wage and other operating costs, is \$22 per hour. #### Objective To maximize profit, Cathy needs to analyze and determine the optimal opening and closing times for the store. ### Graphical Representation Although there is no specific graph provided, the table data can be visualized through a bar chart. The x-axis represents different time periods while the y-axis represents the daily sales in those periods. This graphical representation helps in identifying peak sales hours effectively. ### Strategy for Profit Maximization 1. Calculate the profit for each time period by subtracting the operating costs from the sales revenue, considering the 70% cost of sales. 2. Determine which specific time periods show a positive net profit after accounting for the \$22 per hour operating costs. 3. Adjust store hours to close during periods with consistently low or negative profitability and remain open during periods with higher profitability. #### Example Calculation - For the time period 0600–0700: - Sales: \$40 - Cost of
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