Distributes several varieties of potato chips

Reference no: EM13749303

Happy Chips Inc. currently manufactures and distributes several varieties of potato chips to different types of retail accounts:

1. Grocery segment - with 250 retail customer locations accounting for 2.1 million annual unit sales and 74% of annual revenue.

2. Drug segment- with 140 customer locations accounting for 365K annual unit sales and 14% of annual revenue.

3. Mass merchandise segment- with 6 locations that account for 400K annual unit sales and 12% of annual revenue.

Please note that all deliveries were store-direct with 2 deliveries per week to grocery stores, 1 delivery per week to drugstores , and 3 deliveries per week to mass merchandisers.

The selling prices for each unit were :

1. Grocery $1.70

2. Drugstores $1.90

3. Mass Merchandise $1.40

Mass merchandise segment wants Happy Chips to cover the suggested retail price (generally about $3.00 regardless of channel) with a sticker bearing its reduced price. The machinery to apply these labels had an annual lease cost of $40,000. Labor and material will cost $0.06 per unit.

Reference no: EM13749303

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