Question

1. Assume that you would start a business of having a hot dog truck at KPU Surrey campus

a. Identify your fixed costs and variable costs

b. Identify pricing tactic you would deploy?

c. Decide on a selling price for your hot dog (consider you have only one size)

d. what is your mark up?

e. Based on your selling price, what is your contribution?

f. How many hot dogs do you need to sell to make a profit per month? (Do a Break-even analysis)

g. What should be your daily average sales quantity (assume you open 20 days per month)

h. What are things you could do to lower your break-even sales quantity?

i. What are some things you could do to make sure you meet your break-even point as quickly as possible?

j. Identify some of your pull strategies?

k. What type of promotions would you do to improve your sales?

(Full marks will be awarded for using realistic pricing and practical approaches)

2. Based on your promotion decided, develop your promotional material? Use any appropriate promotional media and marks awarded based on creativity.

Answer 1

ANSWER (a):

The fixed cost would include the investment in hotdog truck, rent paid to the KPU campus (if any), taxes, etc.

The variable costs would include the cost of hot dog buns and the ingredients that would be used in making the hotdog and the hourly labor cost for the cooks who would prepare the hotdogs.

ANSWER (b):

I would deploy a pricing tactic that can attract university students. The prices will be affordable as the students usually have low disposable income.

ANSWER (c):

I would keep the selling price between $3 to $4 for each hotdog.

ANSWER (d):

The markup would be between 0.5$ to $1 per hot dog.