How do costs of a fashion truck compare with the costs of a bricks-and-mortar store?

passionista-truckFashion trucks are starting to pop up across the country.  These fashion trucks are fashion boutiques on wheels.  The owners of the fashion trucks drive them from locale to locale, seeking to bring clothing and accessories to urban dwellers who value the convenience of a mobile store front.

Emily Duran operates the light pink Passionista Fashion Truck, a converted pretzel truck that has been showing up in several Delaware cities recently.  She sells accessories, nail polish, totes, clothing, and other fashion-related items.  She drives her truck from city to city. Her truck has a small dressing room in it where customers can try on the clothing.

Questions

  1. Over the course of a year, what costs do you think would be incurred in owning and operating a fashion truck?
  2. Of the costs you listed in your response to Question 1, which costs would be fixed costs? Which would be variable? Which would be mixed?
  3. Now imagine a bricks-and-mortar fashion store.  Over the course of a year, what costs do you think would be incurred in owning and operating a bricks-and-mortar fashion store?
  4. Of the costs you listed in your response to Question 3, which costs would be fixed costs? Which would be variable? Which would be mixed?
  5. Which structure, fashion truck or fashion store, has more fixed costs versus variable costs?  Which model would have higher operating leverage?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below.  Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.  The YouTube video link below is a narration of the blog post article (no discussion questions are included in the YouTube video; those can be assigned separately.)

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

No comments yet... Be the first to leave a reply!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: