Answered: Lancelot’s Barbecue makes its sauce…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Lancelot’s Barbecue makes its sauce using an old family recipe. Due to overwhelming response on its Instagram account in January 2020, it decides to sell directly to the public and is considering four locations. Two months later, the world shuts down due to the Covid-19 pandemic and Lancelot’s fails to produce a single bottle of its sauce. Which location would have been ideal for making no sauce?

Cost Data	Abilene	Beaumont	Conroe	Dalhart
Fixed costs	$180,000	$220,000	$235,000	$265,000
Direct material cost per unit	$10.50	$10.00	$10.00	$9.25
Direct labor cost per unit	$3.90	$4.00	$2.75	$3.45
Overhead per unit	$1.10	$1.00	$1.50	$1.20
Transportation cost per unit	$1.10	$0.80	$1.25	$0.90

	a.	Dalhart
	b.	Beaumont
	c.	Conroe
	d.	Abilene

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