Question 13 (10% total) Monster Joe’s Monster Milkshakes is…
Question 13 (10% total) Monster Joe’s Monster Milkshakes is anticipating increased competition in the Halloween-themed dessert market. In the past, Monster Joe has been able to sell shakes for $9 apiece, averaging 12,000 shakes sold per year. Monster Joe’s cost structure for next year is expected to be: Fixed marketing: $5,000 Fixed overhead: $7,000 Variable overhead: $2,000 Direct materials: $25,000 Direct labor: $25,000 Product licensing: $10,000 Monster Joe is aiming for operating income to be 30% of revenue. Do they currently accomplish that? (quantify their surplus or deficit) Monster Joe is considering a re-engineering of their production process. Streamlining their existing production process and restructuring their facility could decrease labor by 30%, but would cost $5,000. Is this re-engineering worth doing? (provide an explanation quantifying why or why not)