Problem
Read through the information below and answer the questions that follow.
The Classic Coat Counter trades from a highly sought-after small kiosk at a large international airport. The manager is deciding how much display space to devote to three different coats. Sales and costs for the current month are shown below:
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Bergman
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Hepburn
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Kelly
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Selling price per unit
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£164
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£150
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£180
|
|
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Variable costs per unit
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£112
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£105
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£125
|
|
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Average units sold per day
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12
|
18
|
8
|
|
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Average units sold per metre of display space per day
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10
|
6
|
8
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|
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Number of days in month
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|
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30
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Total fixed costs
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|
|
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£30,000
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From next month, after a re-allocation of display space, the Classic Coat Counter will have a maximum display space of 8 metres available for the three coats. The manager wants a minimum of one metre and a maximum of four metres display space for each coat.
• Show the contribution margin per unit for each coat and the total revenue, total contribution, and total profit for the current month.