Burger Kings Case Study

1. The variable costs incurred from making Burger Kings stratifies would include all the ingredients necessary to make them (batter, oil, potatoes, salt, and any other special ingredient). Variable costs would also include any of the packaging necessary to sell the Satisfries. Even though the articles states that the same ingredients that go into making regular fries go into making stratifries, it is still likely that there are slight changes in the process that may increase or decrease the amount of variable costs. 

1. The fixed costs incurred by Burger King in the development of the Satisfries would include the fixed amount paid to McCain foods and any other costs towards researching and developing the new product. 

1. The articles states that there arent any significant differences in the way that regular fries and Satisfries are made. This means that the fixed costs incurred by Burger King in the making and selling of Satifries would not have changed much.

1. Because Burger King is introducing a new product, the breakeven point will be higher at the beginning of the product launch. Burger King is spending more money on their new product. They are marking up the Stratisfries which means that it will be easier for them to reach their higher breakeven point, if the product is successful. Once the costs are covered, the breakeven point will be lower.

4. I would expect the breakeven point to be higher at first in order to cover the development cost of the new fries though once that is covered, the breakeven point would be lower because there would be a higher contribution margin and thus more profit due to the increase in price

) I think the breakeven would rise, but would quickly be recovered by the amount sold. Due to the fact that most people are mostly concerned lately with fast foods being more healthy than other fast foods. By doing this Burger King attracts a certain group of customers who most likely always pay for that sort of fries. Also I am pretty sure that Burger King did its research on this and made a wise decision to raise the price of by just $.30 which is not much for fries that are almost 100 calories less than the regular fries.

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