The Morning Brew Coffee Shop sells? Regular, Cappuccino, and Vienna blends of coffee. The ?shop's current daily labor cost is $350?, the equipment cost is $130?, and the overhead cost is $250. Daily demands, along with selling price and material costs per beverage, are given below:
|
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:
|
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
|
$1.50
|
1. Calculate the change in labor and multifactor productivity if Eiskaffee is added to the menu.
2. If everything else remains? unchanged, how many units of Eiskaffee would have to be sold to ensure that the multifactor productivity increases from its current? level?