INTRODUCTION Snowie™, owned by Carl and Gordon Rupp, is a company that provides training, equipment, and supplies for operating a shaved ice business. Shaved ice is an ice-based refreshment made by shaving a block of ice into a fluffy, snow-like ice. The product is served in cups with flavored syrups added to the ice. Due to its fine texture, shaved ice absorbs the syrup, making each bite flavorful. Snowie does not sell franchises. It sells a wide array of equipment and supplies, including ice shavers, kiosks, carts, buses, syrups, cups, and other supplies to independent operators PART 2: SPECIAL-ORDER PRICING FOR A SNOWIE EVENT Assume that Main Street Kent, an organization that hosts outdoor events in downtown Kent, approaches you about bringing your Snowie kiosk to the Octoberfest in Kent for one day in October. Main Street Kent will provide the cups for the event that are branded with the Kent Octoberfest logo, so you will not have any cup costs for this event. Main Street Kent will also not be charging you a registration fee for this event. Main Street Kent will allow you to advertise your business in its mailings for two months at no cost and asks you to cut your Snowie price for this one event to US$3.00 in exchange for the free advertising. You have no other event scheduled for this one day in October, and you would work the event by yourself (you will not pay an employee for this one-day event). You anticipate that you will sell 200 Snowies on this one day at Octoberfest. Do you accept Main Street Kent’s special price offer? Why or why not? Support your answer. Sales revenue from Octoberfest (200 Snowies sold) Variable costs for Octoberfest Total contribution margin - Octoberfest Selling price per large Snowie $ 3.00 Ice per Snowie $ 0.20 Spoon straw (need one per Snowie) $ 0.02 Styrofoam cup (need one per Snowie) $ - Napkin (need two per Snowie) $ 0.0200 Syrup cost per Snowie (from Part 1, Question 2) $0.1518 Total variable cost per Snowie $ 0.3918
INTRODUCTION
Snowie™, owned by Carl and Gordon Rupp, is a company
that provides training, equipment, and supplies for operating
a shaved ice business. Shaved ice is an ice-based refreshment
made by shaving a block of ice into a fluffy, snow-like ice.
The product is served in cups with flavored syrups added to
the ice. Due to its fine texture, shaved ice absorbs the syrup,
making each bite flavorful. Snowie does not sell franchises.
It sells a wide array of equipment and supplies, including ice
shavers, kiosks, carts, buses, syrups, cups, and other supplies
to independent operators
PART 2: SPECIAL-ORDER PRICING FOR A
SNOWIE EVENT
Assume that Main Street Kent, an organization that hosts
outdoor events in downtown Kent, approaches you about
bringing your Snowie kiosk to the Octoberfest in Kent for one
day in October. Main Street Kent will provide the cups for the
event that are branded with the Kent Octoberfest logo, so you
will not have any cup costs for this event. Main Street Kent
will also not be charging you a registration fee for this event.
Main Street Kent will allow you to advertise your business
in its mailings for two months at no cost and asks you to cut
your Snowie price for this one event to US$3.00 in exchange
for the free advertising. You have no other event scheduled
for this one day in October, and you would work the event by
yourself (you will not pay an employee for this one-day event).
You anticipate that you will sell 200 Snowies on this one day
at Octoberfest. Do you accept Main Street Kent’s special price
offer? Why or why not? Support your answer.
| Sales revenue from Octoberfest (200 Snowies sold) |
| Variable costs for Octoberfest |
| Total contribution margin - Octoberfest |
| Selling price per large Snowie | $ 3.00 |
| Ice per Snowie | $ 0.20 |
| Spoon straw (need one per Snowie) | $ 0.02 |
| Styrofoam cup (need one per Snowie) | $ - |
| Napkin (need two per Snowie) | $ 0.0200 |
| Syrup cost per Snowie (from Part 1, Question 2) | $0.1518 |
| Total variable cost per Snowie | $ 0.3918 |
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