seven days a week, the Red Cloud Soup Kitchen provides a daily meal to individuals in need.  Several local governmental entities and several nonprofit organizations provide financial assistance to the Soup Kitchen and require weekly reporting.  Red Cloud’s current Soup Kitchen can accommodate a maximum of 250 people per daily meal sitting.  The base cost to keep their kitchen open on a daily basis is $250.  The Soup Kitchen must employ 1 cook per 25 individuals attending the meal and cooks are paid a daily flat fee for their service of $50 per meal prepared.  In terms of food costs, the daily meal costs the Soup Kitchen $2.50 per individual.

(a) Identify the fixed, step, and variable costs.

(b) If 125 people take advantage of this daily service, what is the total cost to the Soup Kitchen for one week of food service?

(c) If 250 people take advantage of this daily service, what is the total cost to the Soup Kitchen for one week of food service?

(d) The local governmental entities and local nonprofit organizations collectively provide the Soup Kitchen $10,000 per week.  Over a week, how many individuals can the Soup Kitchen feed on a daily basis and precisely break-even with the funds provided by these organizations?

(e) The Red Cloud Soup Kitchen receives a “Healthy Foods Initiative” Federal Grant.  This federal grant provides the Soup Kitchen an additional $2,500 per week in funding, but due to the food now being healthier than previously the per individual food cost becomes $4.00 per individual per meal.  Based on these changes what is the new break-even point for the average number of individuals served daily over the course of a full week?

Answer rating: 100% (QA)

Answer a Fixed Costs Cost to keep the kitchen open 250 ... View the full answer