QUES TION 10 Incorrect 0.00 points out of 3.00 PFl ag question Customer-Level Pl

Question

QUES TION 10 Incorrect 0.00 points out of 3.00 PFl ag question Customer-Level Planning 7-Eleven operates a number of convenience stores worldwide. Assume that an analysis of operating costs, customer sales, and customer patronage reveals the following Fixed costs per store Variable cost ratio Average sale per customer visit Average customer visits per week Customers as portion of city population $70,000/year 0.80 $16.00 1.50 0.05 Determine the city population required for a single 7-Eleven to earn an annual profit of $40,000 Round annual contribution per customer to two decimal places For customers required for desired profit and required population, round up to the nearest whole number (i.e., 325.333 customers 326) Annual contribution per customer Customers required for desired profit Required population Check

Explanation / Answer

Fixed costs per store per year =$70,000 Annual desired Profit per Store =$40,000 Annual contribution per store =Fixed cost + desired profit =$70,000+$40,000 =$110,000 variable cost ratio =0.80 Contribution to sales ratio =1-0.80 =0.20 =20% Annual Sales Per store =Contribution / 20% =$110,000/0.20 =$550,000 Average Sales per customer per anum =Average Sales per visit *Average visits per Week *52 weeks Average Sales per customer per anum =$16*1.50*52 =$1248 1 Annual Contribution per customer =Average Annual sales per customer *0.20 =$1248*0.20 =$249.60 2 number customers required for desired profit = Sales/ Average Sales per customer per anum =$550,000/$1248 =440.71 =442 rounded off 3 required population =Number of Customers /Customer Portion in City population =442/0.05 =8840

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