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Dino?s Place operates a wine outlet in Miami. One-...

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Dino?s Place operates a wine outlet in Miami. One-gallon bottle sell for 18. Daily fixed costs are $4,500 and variable cost per gallon is $9. An average of 750 gallon is sold each day. Dino?s Place has capacity of 800 gallon per day. Required: a. Determine the average cost per gallon. b. Explain the difficulties of the fixed cost per unit. c. A bus loaded with 40 tourist?s stops by closing time and the tour director offers Dino?s Place$450 for 40 gallons. Dino?s Place refuses, saying they will lose $3.75 on each gallon. Is Dino?s Place correct about the $3.75? Why or why not? Explain with calculations. Should they accept the offer? d. A fund ? raising organization has offered Dino?s Place a one-year contract to buy 300 gallons a day for $10.75 each. Should they accept the offer? Why or why not? Explain with calculations. e. What qualitative matters would be taken in considerations with requirement c and d? Explain. Would you change the decision taken on c and d? Explain.

 

Paper#3232 | Written in 18-Jul-2015

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