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Should Bob add espresso hot chocolate to his product mix?

Bob jitters owner of Virtual buzz Coffee "House is in a quandary. Many customers have expressed disappointment that Virtual Buzz does not serve espresso hot chocolate. Currently, it serves both espresso and hot chocolate separately but not together. The expresso sells for $1.75 per mug and costs $.50 to make. If bob were to make espresso hot chocolate, he would sell it for $2.50 but it would cost $1.40 per mug, respectively. Based on customer responses, Bob estimates that he would be cut in half Bob estimates that he could sell 500 mugs of the espresso hot chocolate to his product mix?

Should Bob add espresso hot chocolate to his product mix?

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It appears that part of a sentence was left out of the description, but I think I can answer your question even without it. I suspect the missing information says that Bob will lose half of his Expresso business because customers will migrate to the new ...

Solution Summary

The solution shows calculations for changing and/or expanding the product mix, and draws conclusions about the calculations

$2.19