PLEASE ANSWER 4, 5, AND 6

Read Case Study Mead Meals on Wheels

Case Study Mead Meals on Wheels

The Mead Meals on Wheels Center (MMWC) provides meals every day to the homebound elderly. The city of Wabash pays MMWC $32 per week for each person it serves. There is no shortage of demand for MMWCs services among the elderly citizens of Wabash, and MMWC can find qualified recipients for as many meals as it can deliver. Each person helped by MMWC receives two hot meals per day, seven days per week, for a total of 14 meals every week.

To service the contract, MMWC has a central kitchen that has the capacity to produce a maximum of 9,600 meals per day. It costs MMWC an average of $36,000 per week to operate the kitchen and other central facilities regardless of the number of meals that MMWC serves. This covers all of MMWCs fixed costs (e.g., rent, equipment costs, and its personnel including administrative staff) as well as its fixed seasonal service contract costs (utilities, snow removal, etc.).

The first problem that MMWC faces is figuring out how much it can afford to spend per person, per week for food to supply the program. Food is MMWCs only variable expense. You are MMWCs only program analyst.

Question 4: What do you tell her? Support your recommendation and present your findings in a way that the executive director will understand.

a.Assuming that you pay your suppliers quarterly and that you are paid by Wabash quarterly, what would you recommend doing?

b.Would your answer be different if you were paid by Wabash and pay your suppliers weekly? Annually?

You finish your capital budget analysis just in time to prepare the operating budget for the coming year. The executive director wants you to use last years budget as a starting point but to update it to reflect the higher fixed costs that occurred during this years winter operations (i.e., the first quarter). In addition, she has decided to accept your recommendation about the equipment. If you decide to go ahead with the purchase, a local bank will lend MMWC the full purchase price of the equipment and only charge MMWC for interest during the first year of the loan. Interest on the loan would be set at 8 percent per year. MMWCs normal policy is to assume a 10 percent residual value on all kitchen equipment and to depreciate it over five years on a straight-line basis.

Question 5: Incorporating all of the things that have happened during the year, as well as your capital budgeting recommendation, prepare a new quarterly budget and an annual summary for MMWC for the coming year.

Question 6: Given the profits that MMWC expects to produce in the next fiscal year, should it expand and feed more people? Why has it chosen not to feed more than 5,200 people? What would be required to expand MMWC beyond its current level of operations?

Using the information in the case study, discuss the following:

MMWC buys the equipment to expand their services. Present a recommendation supporting the type of financial impact the expansion of services will have on MMWC.

Clearly label the calculation of the impact of food costs and the financial impact costs. Use formulas to calculate the costs and format the cells to insert a comma if there is more than three numbers and round to the nearest whole number.