Case 1. Companies like Compaq and Proctor & Gamble have recently added a new employee benefit-on-site dinner-to-go.

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Case 1. Companies like Compaq and Proctor & Gamble have recently added a new employee benefit-on-site dinner-to-go. Employees can order reheatable pre-packaged din- ners during the day, and have these meals delivered to their offices at 5:00 PM. Similar to a company cafeteria, employees pay less for these meals than they would for similar items at a for-profit take-out. Garland Enterprises, a software development company, is considering starting a similar program. The company plans to offer pre-packaged: (1) children's meals. and (2) adult dinners. Data relating to the two types of meals follows: Children's Adults' Sale price $2.00 $5.00 Cost of food 1.00 2.75 Cost of labor to prepare lood. 0.50 1.25 Cost of plastic containers. 0.10 0.10 Delivery expense 0.15 0.15 Other (annual) costs of offering this new service are Chef's salary. Utilities expense. Marketing the new service to the employees. $20,000 5.000 750 Required 1. If employees purchase on average two children's dinners for every adult dinner, how many adult dinners and how many children's dinners must employees purchase each year for Garland to break even on the new service? (Carry your computations to five decimal places.) 2. If employees purchase on average two adult meals for every children's dinner, how many adult dinners and how many children's dinners must employees purchase each year for Garland to break even on the new service? (Carry your computations to five decimal places.) 3. Explain why your answers to requirements 1 and 2 differ. 4. In light of your analysis, should Garland focus on promoting the availability of adult meals or children's meals? Why? 5. Why might Garland be satisfied with breaking even on the dinner-to-go service (rather than requiring the service to earn a profit)?

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Accounting

ISBN: 9780130906991

5th Edition

Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones

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