The Morning Brew Coffee Shop
The Morning Brew Coffee Shop sells Regular, Cappuccino, and Vienna blends of coffee. The shop’s current daily labor cost is $ 320 the equipment cost is $ 125 and the overhead cost is $ 225 Daily demands, along with price and material costs per beverage, are given below:
Current Product Line
Regular Coffee
Cappuccino
Vienna coffee
Beverages sold
400
200
150
Price per beverage
$ 2.00
$ 3.00
$ 4.00
Material per beverage ($)
$ 0.50
$ 0.75
$ 1.25
Harald Luckerbauer, the manager at Morning Brew Coffee Shop, would like to understand how adding Eiskaffee (a German coffee beverage of chilled coffee, milk, sweetener, and vanilla ice cream) will alter the shop’s productivity. Her market research shows that Eiskaffee will bring in new customers and not cannibalize current demand. Assuming that the new equipment is purchased before Eiskaffee is added to the menu, Harald has developed new average daily demand and cost projections. The new equipment cost is $ 200 and the overhead cost is $ 350 Modified daily demands, as well as price and material costs per beverage for the new product line, are given below:
Modified Product Line (with Eiskaffee)
Regular Coffee
Cappuccino
Vienna coffee
Eiskaffee
Beverages sold
400
200
150
125
Price per beverage
$2.00
$ 3.00
$ 4.00
$ 6.00
Material per beverage ($)
$ 0.50
$ 0.75
$ 1.25
$ 2.00
a. Calculate the change in labor and multifactor productivity if Eiskaffee is added to the menu. (Note: Be sure to round each individual labor and multifactor productivity to no fewer than two decimal places before calculating the percentage changes.) The change in labor productivity if Eiskaffee is added to the menu is enter your response here%. (Enter your response as a percent rounded to two decimal places and include a minus sign if productivity decreases.) The change in multifactor productivity if Eiskaffee is added to the menu is enter your response here%.
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