Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bene Petit First year operating data: Single (1 serving) Dual (2 servings) Family (4 servings) Total Customer Meals Sold 3,000 5,000 12,000 20,000 Total Customer

Bene Petit

First year operating data:

Single

(1 serving)

Dual

(2 servings)

Family

(4 servings)

Total

Customer Meals Sold

3,000

5,000

12,000

20,000

Total Customer Servings

3,000

10,000

48,000

61,000

Customer Orders

(Average = 4 meals per order)

750

1,250

3,000

5,000

Number of Donated Meals

(1 per customer meal)

3,000

5,000

12,000

20,000

Number of Donated Deliveries

(500 meals per delivery)

6

10

24

40

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 variable costs of the single serve meals (as well as the donated meals) could be avoided.
  • About 10% of the fixed costs that are currently allocated to the single serve meals could be avoided.
  • Taylor believes that about 25% of single serve customers would switch to dual-serving meals, but would reduce their order size to from 4 meals per week to 2 meals per week.

Should Taylor eliminate the single-serve meals from her product/service offering? Why or why not?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Management A Strategic Emphasis

Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins

7th edition

77733770, 978-0077733773

More Books

Students also viewed these Accounting questions