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Annie's Homemade Ice Cream is considering starting a Fan Club to grow its revenues, particularly during the winter months. Each member of the Fan Club
Annie's Homemade Ice Cream is considering starting a Fan Club to grow its revenues, particularly during the winter months. Each member of the Fan Club would pay a monthly fee to obtain the following benefits: One free t shirt received at the time of enrollment. Each t shirt costs Annie's One free ice cream flight per month. Each flight consists of twoounce servings of four flavors. Annie's cost per flight is Eligibility to spin the prize wheel after each increment of servings purchased. Annie's estimates each member will buy four servings of ice cream per month; therefore, being eligible to spin the prize wheel once every three months, or four times a year. The average cost of each prize awarded when a fan club member spins the prize wheel is In addition, Annie's uses per member per month to "buy" ice cream for per serving. The company then donates the ice cream purchased by fan club members to community organizations such as Big BrothersBig Sisters, public schools, and first responders. Annie's cost per prepackaged, donated serving is Annie's estimates customers who are not members of the fan club buy two servings of ice cream per month, whereas the fan club's benefits motivate loyal members to buy four servings per month. The price per serving and ingredient cost per serving are and respectively. The company is asking your recommendation whether it should charge members per month or for an annual membership or per month or for an annual membership Required: Calculate the incremental revenue per member, per year under both pricing scenarios by completing the following table: In addition, Annie's uses per member per month to "buy" ice cream for per serving. On an annual basis, this means each member contributes that "buys" servings of ice cream per year. The company then donates the ice cream purchased by fan club members to community organizations such as Big BrothersBig Sisters, public schools, and first responders. Annie's cost per prepackaged, donated serving is Calculate the incremental expense per member, per year by completing the following table: Calculate the incremental profit per member, per year under both pricing scenarios by completing the following table: If Annie's could attract fan club members at a price of per month or members at a price of per month, how much additional profit loss does the price provide when compared to the price? If Annie's could attract members at a price per month, what is the fewest number of members the company could enroll at per month and still earn higher profits than the scenario? Complete this question by entering your answers in the tabs below. Required Required Required Required Calculate the incremental revenue per member, per year under both pricing scenarios by completing the following table: Hint: Fan Club members buy two additional servings per month compared to nonmember customers. Per Member per Year:, per MonthScenario per MonthScenarioMembership dues received,,Loyalty revenueTotal incremental revenue,
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