Making sales mix decisionsEach morning, Max Smith stocks the drink case at Max’s Beach Hut in Myrtle Beach South Carolina. The drink case has 120 linear feet of refrigerated drink space. Each linear foot can hold either six 12-ounce cans or three 20-ounce bottles.Max’s Beach Hut sells three types of cold drinks:Licious-Ade in 12-oz. cans for $1.40 per canLicious-Ade in 20-oz. bottles for $1.90 per bottlePep-Cola in 20—oz. bottles for $2.20 per bottleMax’s Beach Hut pays its suppliers:$0.20 per 12-oz. can of Licious-Ade$0.35 per 20—oz. bottle of Licious—Ade$0.55 per 20-oz. bottle of Pep-ColaMax’s Beach Hut’s monthly fixed costs include;Max’s Beach Hut can sell all the drinks stocked in the display case each morning.RequirementsWhat is. Max’s Beach Hur’s constraining factor? What should Max stock to maximize profits?Suppose Max’s Beach Hut refuses to devote more than 80 linear feet to any individual product. Under this condition, how many linear feet of each drink should Max’s stock? How many units of each product will be available for sale each day? Hut rental$ 355Refrigerator rental65Max's salary1,700Total fixed costs$2,120

Sales mix refers to the proportion of the units of business’s product that are sold.

Answered: Hut rental $ 355 Refrigerator rental 65…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Making sales mix decisions

Each morning, Max Smith stocks the drink case at Max’s Beach Hut in Myrtle Beach South Carolina. The drink case has 120 linear feet of refrigerated drink space. Each linear foot can hold either six 12-ounce cans or three 20-ounce bottles.

Max’s Beach Hut sells three types of cold drinks:

Licious-Ade in 12-oz. cans for $1.40 per can
Licious-Ade in 20-oz. bottles for $1.90 per bottle
Pep-Cola in 20—oz. bottles for $2.20 per bottle

Max’s Beach Hut pays its suppliers:

$0.20 per 12-oz. can of Licious-Ade
$0.35 per 20—oz. bottle of Licious—Ade
$0.55 per 20-oz. bottle of Pep-Cola

Max’s Beach Hut’s monthly fixed costs include;

Max’s Beach Hut can sell all the drinks stocked in the display case each morning.

Requirements

What is. Max’s Beach Hur’s constraining factor? What should Max stock to maximize profits?
Suppose Max’s Beach Hut refuses to devote more than 80 linear feet to any individual product. Under this condition, how many linear feet of each drink should Max’s stock? How many units of each product will be available for sale each day?

Hut rental
$ 355
Refrigerator rental
65
Max's salary
1,700
Total fixed costs
$2,120

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