10. Bene Petit currently offers three meal sizes: single-serve, dual-serve, and family-size. Single-serve meals make up...

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10. Bene Petit currently offers three meal sizes: single-serve, dual-serve, and family-size. Single-serve meals make up about 5% of total sales revenue and have the lowest contribution margin of the three products. Taylor is trying to decide whether to eliminate single- serve meal kits but is unsure how it would affect profit and the number of meals donated to homeless families. The following additional details are available: The price of a single-serve meal is $5. Variable manufacturing costs for customer meals are $2.20 per single-serve meal, $3.20 per dual-serve meals, and $5.20 per family-size meal. Variable manufacturing costs are $1.25 per donated meal. Variable delivery expenses for customer meals are $2 per order and the average order size is 4 meals per order. Delivery expenses for donated meals are $125 for every 500 meals delivered, or about $0.25 per donated meal. About $500 in monthly advertising expenses could be saved if the single-serve product was eliminated. Taylor believes that about 25% of single-serve customers would switch to dual-serve meals but would reduce their order size from 4 meals per week to 2 meals per week. a. How much contribution margin will be lost on the 3,000 single-serving meals that are eliminated? (Ignore the increase in dual-serve meals for this question.) Contribution margin lost 8. The athletic director of a local high school has approached Bene Petit with a special offer. The director would like to promote meals to athletes and their families to encourage healthy eating and as a fundraising opportunity. The meals would be delivered directly to the school, where families would pick them up and pay the school directly. The school would then pay Bene Petit. The following additional details are available about the special order: The athletic director has requested a 40% discount off the normal price for this bulk order. Families who purchase the meals would receive 1/2 of the discount and the school would put the other 20% into a fund to support an athlete's award banquet. The fundraiser would run for 3 months (12 weeks), and the director estimates that about 30 families would order 3 family-size meals per week. Variable manufacturing costs for a family-size meal are $5.20 for a customer meal and $1.25 for a donated meal. Variable delivery expenses on a normal order are $2 per customer order. Weekly delivery expenses are estimated at $50 for this special order. Bene Petit has the capacity to deliver donated meals without increasing delivery expense to community partners. Bene Petit has the capacity to fill the order without disrupting normal operations but estimates that at least 5 of the families are already Bene Petit customers who currently order 4 family-size meals per week. Even if the special order is not profitable, it could be counted as part of Bene Petit's social mission to contribute to the local community. a. What is the discounted price (per meal) for the special order? Discounted price $ 10 per meal ! Required information d. How much revenue will Bene Petit lose from existing customers who participate in the fundraiser? Revenue Lost e. How much will Bene Petit save on manufacturing costs from the lost sales to existing customers (including both the customer meal and the donated meal)? Cost savings 1114 1411 5. Assume that the sales mix shifts to be 10% single serving, 20% dual serving, and 70% family-size, with all other variables remaining the same. a. What is the new average contribution margin per meal sold? New average contribution margin $ 11 per meal sold b. How many total meals must be sold to earn $106,000 in net operating income? Total meals 12,707 S Next> Customer Meals Sold Total Customer Servings Customer Orders (Average = 4 meals per order) Number of Donated Deliveries (500 meals per delivery) Number of Donated Meals (1 per customer meal) Single (1) Dual (2 Family (4 Total serving) servings) servings) 3,000 5,000 12,000 20,000 3,000 10,000 48,000 61,000 750 1,250 3,000 5,000 3,000 5,000 12,000 20,000 6 10 24 40 Additional information about selling prices, variable costs, and fixed costs is summarized below: The average sales price for customer meals is $5 per serving. The average direct materials (ingredients) cost of customer meals is $1 per serving. Direct labor costs average $0.75 per customer meal. Variable manufacturing overhead costs are applied at a rate equal to 60% of direct labor. The delivery expense for customer meals is $2 per customer order. The incremental cost of producing the donated meals is $1.25 per meal. The delivery expense for donated meals is $125 per delivery to community partners. The following fixed costs are allocated to customer meals based on total sales revenue: Fixed manufacturing overhead costs are $75,000 per year. Fixed selling expenses are $29,000 per year. Fixed administrative expenses are $40,000 per year. The attached excel file shows a contribution margin income statement based on these starting assumptions. You should return to this starting spreadsheet for each part of the case below. Part 3 CVP Analysis (starting data).xlsx 10. Bene Petit currently offers three meal sizes: single-serve, dual-serve, and family-size. Single-serve meals make up about 5% of total sales revenue and have the lowest contribution margin of the three products. Taylor is trying to decide whether to eliminate single- serve meal kits but is unsure how it would affect profit and the number of meals donated to homeless families. The following additional details are available: The price of a single-serve meal is $5. Variable manufacturing costs for customer meals are $2.20 per single-serve meal, $3.20 per dual-serve meals, and $5.20 per family-size meal. Variable manufacturing costs are $1.25 per donated meal. Variable delivery expenses for customer meals are $2 per order and the average order size is 4 meals per order. Delivery expenses for donated meals are $125 for every 500 meals delivered, or about $0.25 per donated meal. About $500 in monthly advertising expenses could be saved if the single-serve product was eliminated. Taylor believes that about 25% of single-serve customers would switch to dual-serve meals but would reduce their order size from 4 meals per week to 2 meals per week. a. How much contribution margin will be lost on the 3,000 single-serving meals that are eliminated? (Ignore the increase in dual-serve meals for this question.) Contribution margin lost 8. The athletic director of a local high school has approached Bene Petit with a special offer. The director would like to promote meals to athletes and their families to encourage healthy eating and as a fundraising opportunity. The meals would be delivered directly to the school, where families would pick them up and pay the school directly. The school would then pay Bene Petit. The following additional details are available about the special order: The athletic director has requested a 40% discount off the normal price for this bulk order. Families who purchase the meals would receive 1/2 of the discount and the school would put the other 20% into a fund to support an athlete's award banquet. The fundraiser would run for 3 months (12 weeks), and the director estimates that about 30 families would order 3 family-size meals per week. Variable manufacturing costs for a family-size meal are $5.20 for a customer meal and $1.25 for a donated meal. Variable delivery expenses on a normal order are $2 per customer order. Weekly delivery expenses are estimated at $50 for this special order. Bene Petit has the capacity to deliver donated meals without increasing delivery expense to community partners. Bene Petit has the capacity to fill the order without disrupting normal operations but estimates that at least 5 of the families are already Bene Petit customers who currently order 4 family-size meals per week. Even if the special order is not profitable, it could be counted as part of Bene Petit's social mission to contribute to the local community. a. What is the discounted price (per meal) for the special order? Discounted price $ 10 per meal ! Required information d. How much revenue will Bene Petit lose from existing customers who participate in the fundraiser? Revenue Lost e. How much will Bene Petit save on manufacturing costs from the lost sales to existing customers (including both the customer meal and the donated meal)? Cost savings 1114 1411 5. Assume that the sales mix shifts to be 10% single serving, 20% dual serving, and 70% family-size, with all other variables remaining the same. a. What is the new average contribution margin per meal sold? New average contribution margin $ 11 per meal sold b. How many total meals must be sold to earn $106,000 in net operating income? Total meals 12,707 S Next> Customer Meals Sold Total Customer Servings Customer Orders (Average = 4 meals per order) Number of Donated Deliveries (500 meals per delivery) Number of Donated Meals (1 per customer meal) Single (1) Dual (2 Family (4 Total serving) servings) servings) 3,000 5,000 12,000 20,000 3,000 10,000 48,000 61,000 750 1,250 3,000 5,000 3,000 5,000 12,000 20,000 6 10 24 40 Additional information about selling prices, variable costs, and fixed costs is summarized below: The average sales price for customer meals is $5 per serving. The average direct materials (ingredients) cost of customer meals is $1 per serving. Direct labor costs average $0.75 per customer meal. Variable manufacturing overhead costs are applied at a rate equal to 60% of direct labor. The delivery expense for customer meals is $2 per customer order. The incremental cost of producing the donated meals is $1.25 per meal. The delivery expense for donated meals is $125 per delivery to community partners. The following fixed costs are allocated to customer meals based on total sales revenue: Fixed manufacturing overhead costs are $75,000 per year. Fixed selling expenses are $29,000 per year. Fixed administrative expenses are $40,000 per year. The attached excel file shows a contribution margin income statement based on these starting assumptions. You should return to this starting spreadsheet for each part of the case below. Part 3 CVP Analysis (starting data).xlsx

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a To calculate the contribution margin lost on the 3000 singleserving meals that are eliminated we first need to find the contribution margin per singleserving meal Contribution Margin per SingleServi... View the full answer