Problem 4: DROPPING PRODUCTS OR SERVICES Bene Petit currently offers three meal sizes: single-serve, dual-serve, and family-sized. 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 $5.00. Variable manufacturing costs for customer meals are $2.20 per single serve meal, $3.20 per dual serve meals and $5.20 per family sized 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 were eliminated. Taylor believes that about 25% of single serve customers would switch to dual-serving meals, but would reduce their order size from 4 meals per week to 2 meals per week.

b) How much contribution margin will be gained from the increase in dual-serving meals?