Stance Sock Vending Machines
What types of costs are associated with a Stance™ sock vending machine located in anairport?
At Cleveland Hopkins International Airport in northeastern Ohio, a vending machine that dispenses socks was recently installed. Located in the C concourse, theStancesock vending machine offers a variety of what Stance refers to as “uncommon” socks. The designs on the socks in the Cleveland airport vending machine include Cleveland Browns, Cleveland Indians, patriotic flag designs, Hawaiian tropical flowers, and others.
The machine is stocked with an assortment of socks. The airport traveler inserts a credit card, makes a sock selection in the keypad, and the socks are dispensed to the purchaser.
Stance sells its socks through retailers, at its own stores, via vending machines, and through monthly subscriptions.
Requirements:
You are the CFO of Stance Inc. write a memo to the CEO. The form of the memo should include a brief statement of the facts. An analysis of the situation covering the items listed below, a recommendation.
1) the types of costs incurred with the airport vending machines. Assume that Stance rents the vending machine from a vending service. Use your imagination and list as many costs as you can.
Use the chart below to list the types of costs you think the company has.
Cost
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Variable
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Fixed
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Mixed
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e.g. socks
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X
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2) the impact of the current cost structure on the breakeven volume analysis for the airport machines.
3) the impact on the breakeven analysis if the company were to purchase the vending machines.