Starbucks Accounting
This is a managerial accounting paper
Starbucks accounting questions
From the case in 2004, explain the logic for a price increase from Starbuck's perspective.
In 2004, Starbucks was facing rising costs for its input goods such as milk and coffee beans. In 2004, Starbucks announced that the "price for a tall coffee is going up by 10 cents. A 12 ounce coffee used to cost $1.55 without tax but it will now cost $1.65" (Wirth 2004). Consumers were understandably annoyed by the price increases, and groused about how already expensive coffee was getting more expensive. However, Starbuck's decision seemed to be wise in the short-term. Customers who are price-sensitive to a 10 cent increase in the price of beverages are unlikely to be regular patrons at Starbucks. According to one Starbucks coffee buyer: "Because it's only 10 cents it won't make that much of a difference to me, even though I do drink it every day. I'm willing to pay whatever it takes to get my Starbuck's fix in the morning" (Wirth 2004).
Starbucks needs to balance operating costs with the price of its beverages. Starbucks also needs to take into consideration consumer...
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