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 fund-raising 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 ½ of the discount and the school would put the other 20% into a fund to support an athlete’s award banquet.

The fund-raiser would run for 3 months (12 weeks) and the director estimates that about 30 families would order 3 family-sized meals per week.

Variable manufacturing costs for a family sized meal are $5.20 for a customer meal and $1.25 for a donated meal.

Variable delivery expenses on a normal order is $2.00 per customer order

Weekly delivery expense is 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 sized meal 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.

Questions:

What is the discounted price (per meal) for the special order?

How much additional revenue will Bene Petit earn on the 12-week special order?

How much additional manufacturing cost will Bene Petit incur for the 12-week special order (including 35% he additional donated meals)?

How much revenue will Bene Petit lose from existing customers who participate in the fund-raiser

How much manufacturing cost will Bene Petit save on the lost sales to existing customers (including both the customer meal and the donated meal)

How much delivery expense will Bene Petit save on the lost sales to existing customers?

How many additional meals will Bene Petit be able to donate if it accepts the special order?

How much incremental profit will Bene Petit earn on the special order?

List 3 reasons Bene Petit should accept or reject the special order. Open ended. Not graded